Marine Insurance Law: Fourth Edition by E.R. Hardy Ivamy

As a E R. Me Ay lvaiuy ENarine Insurance Fourth edition | Butterworths Insurance Library Marine Insurance is devoted entirely to the law relating to marine insurance. It includes many references to decisions from Lloyd’s Law Reports and the appendices contain a selection of Institute Clauses, as well as other matters. This fourth edition has been necessitated by the continuing development of case law and by the replacement of the original Lloyd’s form, which was first used in about 1779. In addition, the Institute Clauses which were used in connection with the old form have been modernised to take account of the new situation. The Butterworths Insurance Library comprises four volumes with cross- references to one another. Together they form a comprehensive and authoritative statement of the law affecting all types of insurance. llege e of Studies Sources Centre | | Warsash Naut ical Booksh op 31 Ne -Warsash, So wtown Road uthampton $0 3 6FY elepho ne Locks Heath Nautico! Books, 2384 Call or by Pos e | IVAMY, E.R.Hardy Marine Ine re WETRDRAWN FROM LIBRARY STOCK ry worthsInsurance Library = COLLEGE O- MARITIAAE ST UDIES LEARNING RESO URCES CENTRE Marine Insurance Fourth edition E R Hardy Ivamy LLB, PhD, LLD of the Middle Temple, Barrister, ; Professor of Law in the University of London London Butterworths 1985 Butterworths Insurance Library United Kingdom Butterworth & Co (Publishers) Ltd, 88 Kingsway, Lonpon WC2B 61A North Castle Street, EpinsurcuH EH2 3LJ Australia Butterworths Pty Ltd, SypNey, CANBERRA and HoBART Canada Butterworth & Co (Canada) Ltd, Toronto New Zealand Butterworths of New Zealand Ltd, WELLINGTON Singapore Butterworth & Co (Asia) Pte Ltd, StInGAPORE South Africa Butterworth Publishers (Pty) Ltd, DurBAN USA Butterworth Legal Publishers, St Paut, Minnesota, S—EatrLe, Washington, Boston, Massachusetts, Austin, Texas and D & S Publishers, CLEARWATER, MeLBourneE, BrisBANE, ADELAIDE, 6AB and PERTH, and VANCOUVER and AUCKLAND and PRETORIA Florida © Butterworth & Co (Publishers) Ltd 1985 All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, without the written permission of the copyright holder, application for which should be addressed to the publisher. Such written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature. This book is sold subject to the Standard Conditions of Sale of Net Books and may not be re-sold in the UK below the net price fixed by Butterworths for the book in our current catalogue. British Library Cataloguing in Publication Data Ivamy, E.R. Hardy Marine insurance.——4th 1. ed. Insurance, Marine——Law and legislation Great Britain I. Title 344.106 8622 KD1845 ISBN 0 406 25313 7 Typeset by Cotswold Typesetting Lid, Gloucester Printed in Great Britain by Billing and Son Limited, Worcester Preface Since the last edition of this book was published in 1979 and a Supplement in 1982 a fundamental change has occurred in the law of Marine Insurance for the original Lloyd’s form, which was first used in about 1779, has been completely replaced by a new one. In addition, the Institute Clauses which were used in connection with the old form have been modernised to take account of the new situation. Accordingly, some Chapters of this book have been reorganised and substantially rewritten. These Chapters are Chapter 11 (The Form of the Policy), Chapter 13 (Attachment and Duration ofthe Risk under the Policy), Chapter 14 (Marine Risks), Chapter 15 (War and Strike Risks), Chapter 17 (The Exceptions), Chapter 33 (Partial Loss of Ship) and Chapter 35 (Partial Loss of Goods). Throughout the work emphasis has been laid on the effect of the Institute Clauses on the Marine Insurance Act 1906 and the common law. A number of new cases have now been added either to the text or to the footnotes. These include The Yasin [1979] 2 Lloyd’s Rep 45 (subrogation), Bruns v Colocotronis: The Vasso [1979] 2 Lloyd’s Rep 412 (ppi policy), Prudent Tankers Ltd SA v Dominion Insurance Co Ltd: The Caribbean Sea [1980] 1 Lloyd’s Rep 338 (latent defect), Fuerst Day Lawson Ltd v Orion Insurance Co Ltd [1980] 1 Lloyd’s Rep 656 (goods insured ‘from anywhere to anywhere’) West ofEngland Shipowners Mutual Protection and Indemnity Association (Luxembourg) v Atfanouros Shipping SA: The Aifanourios [1980] 2 Lloyd’s Rep 403 (payment of call), Stolos Compania SA v Ajax Insurance Co Ltd: The Admiral C' [1981] 1 Lloyd’s Rep 9, CA (claim to be collected through broker), First National Bank of Chicago v West of England Shipowners Mutual Protection and Indemnity Association (Luxembourg): The Evelpidis Era [1981] 1 Lloyd’s Rep 54 (assignment), The Bamburi [1982] 1 Lloyd’s Rep 312 (constructive total loss), Athens Maritime Enterprises Corporation v Hellenic Mutual War Risks Association (Bermuda) Ltd: The Andreos Lemos [1982] 2 Lloyd’s Rep 483 (piracy), M Almojil Establishment v Malayan Motor and General Underwriters (Private) Ltd: The Al-Jubail IV [1982] 2 Lloyd’s Rep 637, Singapore Court of Appeal (whether time or voyage policy), Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyd’s Rep 122, HL (inherent vice), Allden v Raven: The Kylie [1983] 2 Lloyd’s Rep 444 (non-disclosure), Pindos Shipping Corporation v Raven: The Mata Hari [1983] 2 Lloyd’s Rep 449 (rectification of policy), Integrated Container Service Inc v British Traders Insurance Co Ltd [1984] 1 Lloyd’s Rep 154, CA (sue and labour clause), Container Transport International Inc and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476, CA (non-disclosure), WVMichalos & Sons Maritime SA v Prudential Assurance Co Ltd: The Zinovia [1984] 2 Lloyd’s Rep 264 (constructive total loss), Silver Dolphin Products Ltd v Parcels and General Assurance Association Ltd [1984] 2 Lloyd’s Rep 404 (attachment of risk), Empresa Lineas Maritimas Argentinas v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 2 Lloyd’s Rep 517 (membership of association), Black King Shipping Vv vi Preface Corporation v Massie: The Litsion Pride [1985] 1 Lloyd’s Rep 437 (duty of good faith) and Rhesa Shipping Co SA v Edmunds: The Popi M [1985] 2 All ER 712, HL. A selection of the Institute Clauses has been reproduced in the Appendices by the kind permission of the Institute of London Underwriters, to whom I tender my thanks. Thos R Miller & Son supplied me with the material on the perils insured against by Protection and Indemnity Associations and the rules of entry and membership, and I am particularly grateful for their help. My thanks are also due to the Association of Average Adjusters who have allowed me to set out in an Appendix their Rules of Practice. I should like to thank the staff of Butterworths for undertaking the arduous job of preparing the Index and the Tables of Cases and Statutes and for seeing the book through the press. University College London July 1985 E. R. HARDY IVAMY Contents Preface v Table of statutes Table of cases xv xix PART I—THE MAKING OF THE CONTRACT Chapter 1—Introduction 3 Chapter 2—The nature of marine insurance ‘A Contract of indemnity 4 B C ‘Losses incident to marine adventure’ Mixed sea and land risks’ 7 D The subject-matter insured 4 7 8 Chapter 3—The avoidance of wagering or gaming contracts The position before 1745 11 The position after 1745 11 Chapter 4—Insurable interest A 16 Examples of persons having an insurable interest Owner 11 16 17 Mortgagor and mortgagee 22 Master and crew 23 Agent 24 Carrier 24 Lien holder and pawnors 25 Trustees and executors 25 Captors 26 Insurer 26 Persons expecting a profit from a marine adventure Lender of money on bottomry or respondentia Marina operator B_ 26 27 27 Existence ofinsurable interest at the time of the loss 27 * Chapter 5—The duties of a broker in effecting the policy Duty to obey his principal’s instructions Duty to use proper skill and care 32 Duty to carry out the transaction 37 Chapter 6—Non-disclosure A 30 30 39 Duty to disclose material facts 39 Disclosure by the assured himself 39 Disclosure by agent effecting insurance 41 The test of materiality 44 Circumstances which need not be disclosed Examples of material and immaterial facts The duration of the duty of disclosure 45 53 66 The effect of non-disclosure 68 Broker’s liability towards the insurer for non-disclosure QAmDaAw 69 vii Y vili Contents Chapter 7—Misrepresentation 7] The duty of the assured 71 The duration of the duty 71 The test of materiality 72 Construction of representation 72 Materiality is a question of fact 72 Withdrawal or correction of representation Representation to the first underwriter 78 Effect of misrepresentation 78 Burden of proof 78 Evidence 78 Chapter 8—The premium 80 a “a A The amount of the premium 80 B_ The time for payment of the premium C 77 a? 82 The responsibility for payment of the premium 82 D The effect of acknowledgment of receipt of the premium E The return of the premium 82 82 PART II—THE POLICY Chapter 9—Introduction 89 Chapter 10—The classification of policies A Voyage, time and mixed policies B Floating policies Effect of fraud C 90 90 91 93 Where several policies exist Valued and unvalued policies 93 93 Valued policies 93 1 Conclusiveness of valuation 94 2 Valuation and constructive total loss 3 Valuation and general average sacrifice 4 Valuation and salvage charges Unvalued policies 101 The form set out in the Marine Insurance Act 1906 B_ The form used up to 1982 C 97 97 97 Chapter 11—The form of the policy A 96 The new form 101 102 104 Chapter 12—Designation of the subject-matter in the policy A B_ C The need for reasonable certainty Nature and extent of the interest Interest to be covered 111 106 106 111 Chapter 13—Attachment and duration of the risk under the policy A Time policies 113 B_ Voyage policies 114 Attachment of the risk 114 1 2 Voyage policies on ship 115 Voyage policies on goods 117 3 Voyage policies on freight Duration of the risk 119 1 113 The general rule 118 119 Risk on ship 119 Risk on goods 122 2 Exceptions to the general rule 1 126 . Implied condition as to commencement of adventure 126 Contents _ Change of voyage 127 Deviation 129 Delay in voyage 135 NO OO Or Termination clauses ' 138 Chapter 14—Marine risks 140 Hull clauses 140 Freight clauses 177 Cargo clauses 177 General average 182 Salvage 192 AmOQwS Other risks 194 Chapter 15—War A War risks : and strike risks 197 197 Generally 197 The Institute Clauses 209 Insurance by the State 211 Mutual insurance associations B Strike risks 213 213 Chapter 16—Risks covered by protection and indemnity associations A B C Risks of a general nature 215 War risks 220 Freight and demurrage risks 224 D Through transit risks 224 Chapter 17—The exceptions 225 I Exceptions under the Marine Insurance Act 1906 II]_ Exceptions under the Institute Clauses III Other exceptions expressly stated in the policy IV Qualified undertakings of the insurer Chapter 18—Termination A Termination 273 B Cancellation 273 and cancellation of the policy Chapter 20—Alteration of the policy A B_ C 21—Warranties 274 278 280 Nature of warranties 280 The types of warranty 281 Express warranties 281 Construction of an express warranty 281 Necessity for inclusion in policy 282 Examples of express warranties 282 Sailing warranties 282 Warranty as to position of ship 285 Warranty as to number of crew 285 Convoy warranties 286 Warranty as to nationality 286 Warranty as to neutrality 287 Warranty as to part uninsured Other instances 29] Implied warranties 296 Seaworthiness 296 1 Voyage policies on ship OI HO PWN D 267 268 Chapter 19—Rectification of the policy Chapter 225 256 299 288 273 215 1X x Contents 2 Time policies on ship 302 3. Mixed policies on ship» 306 4 Voyage policies on goods 307 E F G Legality 308 Excuses for breach of warranty 310 Result of breach of warranty 310 Waiver of breach of warranty 311 Chapter 22—The assignment of the policy 315 Assignability of policies 315 Right of assignee to sue in own name 315 Defences available to the insurer 316 Form of the assignment 319 Ineffectiveness of assignment by person having no interest Rights of assignor and assignee inter se 321 AmOQseS Chapter 23—The A B_ construction of the policy 322 Construction and the doctrine of precedent Some general rules of construction 322 Intention of the parties 323 322 Construction of policy as a whole Written and printed words Ordinary meaning 324 Context of words 327 323 323 Reasonable construction 327 ‘Contra proferentem’ rule 328 C_ Rules set out in the Marine Insurance Act 1906 Chapter 24—The policy A B duties, authority and rights of the broker ; The duties and authority of the broker Where there are express instructions Where there are no express instructions The rights of the broker 333 Lien 333 1 Particular lien 333 2 General lien 334 331 331 331 337 PART III—LOSS AND ABANDONMENT Chapter 25—Introduction 341 341 Chapter 26—The types of loss A 330 331 Brokerage Total loss and partial loss 342 342 B_ Actual total loss and constructive total loss 342 C Particular average loss and general average loss 343 Chapter 27—Actual total loss A Actual total loss of ship 346 346 Examples of actual total loss Sale of vessel by master 348 Missing ships 349 B_ Actual total loss of goods 349 C 320 346 Actual total loss of freight 350 Loss of goods 350 , Arrival of goods in unmerchantable condition Sale of perishable cargo 353 352 after effecting the Contents Frustration of chartered voyage Loss of ship before sailing 353 353 Ship unable to proceed 354 Effect of freight being earned 361 Chapter 28—Constructive total loss A 362 Definition of ‘constructive total loss’ 362 Completeness of definition 363 Relation between s 60(1) and s 60(2) 364 Notice of abandonment not an essential ingredient Reasonable abandonment of subject-matter 365 Deprivation of possession of ship or goods 367 “ Damage to ship 372 Damage to goods 374 Constructive total loss arising from contract Effect of constructive total loss 375 TOymoas Effect of restoration on the extent of the loss Chapter 29—Abandonment 375 376 378 When the right to abandon arises Who may abandon 380 Notice of abandonment 381 378 In what cases notice must be given 382 Form of notice 385 To whom the notice must be given 387 Time within which notice must be given 387 No obligation on insurer to accept abandonment 389 What constitutes an acceptance 389 Irrevocability of abandonment 390 Waiver of notice of abandonment 392 The effect of abandonment 392 > Sod ae @ PASS 1 Right to take over the subject-matter insured 2 Right to freight 397 Discretion of the court 397 Persons against whom an order can be made MEASURE Chapter 31—Introduction Chapter 32—Total loss ey 392 \. 392 Chapter 30—Discovery of ship’s papers PART IV—THE 365 400 OF INDEMNITY 405 407 Total loss of freight 407 Effect of devaluation 407° Chapter 33—Partial loss of ship 410 Ship insured against total loss only 410 Particular average warranties 410 ‘Deductible’ clauses 418 Calculating the measure of indemnity 418 Procedure for ascertaining the amount payable SoOQeS Chapter 34—Partial loss of freight 426 427 A Losses net amounting to the specified percentage 427 B_ Losses amounting to the specified percentage 427 xi xii Contents Chapter 35—Partial loss of goods 429 Particular average warranties 429 Apportionment of valuation 432 Calculating the measure of indemnity 432 Liability of insurer for salvage charges GaAwe and particular charges Chapter 36—General 436 average contribution and salvage charges Chapter 37—Liabilities to third parties Chapter 38—Successive losses Generally | 440 Chapter 39—Sue and labour clause A 439 WAR 442 442 ‘Factors, servants and assigns’ 442 Expenses properly incurred 443 Necessity for existence of peril B_ PART V—THE 449 450 RIGHTS OF THE INSURER ON PAYMENT Chapter 40—Subrogation A B C 447 Independent contract 447 Need for peril to be covered by policy 447 Expenses incurred by the insurer not recoverable Scope of s 78(4) 449 Position where there is no ‘sue and labour’ clause The Institute Clauses 451 Cargo clauses 451 Hull clauses 451 455 £ The rights in respect of which subrogation arises The exercise of the right of subrogation 458 The effects of subrogation 458 Chapter 41—The right of contribution 456 461 PART VI—REINSURANCE Chapter 42—Reinsurance 465 A The relation between the original assured and the reinsurer B_ The relation between the reassured and the reinsurer 466 Payment under original policy 466 Expiry of original policy 466 Excess clause 467 Insurable interest 467 Unseaworthiness 468 Proximate cause of loss 469 ‘Total or constructive loss only’ 470 a PART VII—MUTUAL INSURANCE Chapter 43—Mutual insurance 475 Rules of association 475 Terms of entry and membership Contribution by members 476 The period of insurance 477 Cesser of insurance 478 The risks covered 478 475 465 437 Contents Claims = xii 478 Disputes 478 Certificates 479 APPENDICES Appendix I—Statutes 483 The Sale of Goods Act 1979, ss 16-20 483 The Merchant Shipping Act 1894, s 506 The Marine Insurance Act 1906 484 484 The Marine Insurance (Gambling Policies) Act 1909 503 The Marine and Aviation Insurance (War Risks) Act 1952 Appendix II—Marine policy forms 1 2 Lloyd’s form 510 Insurance Companies’ form 510 513 Appendix III—The Institute Clauses 1 Cargo Clauses 516 Institute Cargo Clauses (A) Institute Institute Institute Institute 2 504 516 516 Cargo Clauses (B) 519 Cargo Clauses (C) 523 War Clauses (Cargo) 526 Strikes Clauses (Cargo) 530 Hull Clauses 533 Institute Time Clauses (Hulls) Institute Voyage Clauses (Hulls) 533 540 Institute War and Strikes Clauses (Hulls—Time) 547 Institute War and Strikes Clauses (Hulls—Voyage) 549 3 Freight Clauses 550 Institute Time Clauses (Freight) 550 Institute Voyage Clauses (Freight) 555 Institute War and Strikes Clauses (Freight—Time) 4 558 Institute War and Strikes Clauses (Freight—Voyage) Institute Warranties 565 Appendix IV—The York-Antwerp Rules 1974 560 563 Appendix V—Rules of Practice of the Association of Average Adjusters (1981) Appendix VI—Ship’s Papers—Rules of the Supreme Court INDEX 597 595 568 oo adits, : : = ALT deen Foot <i,a ape ee arp Tat - will Waegee - ‘ * ayy @ he minaA hae SY i 5 is “ ee SS ee Pat 3: ane et ae Alby % Table of statutes Page references printed in bold type indicate where the Act is set out in part or in full. PAGE Admiralty Court Act 1840 SOc Arbitration Act 1950. ‘ 25 479 : British Nationality Act 1948 Capital Allowances Act 1965 s 33 (7) : 509 203 Teens OH GB Netra De ie Pipe Companies Act 1862 . 500 SN 468 CIN ASR oe Companies Act 1985 s 519(1) Courts Act 1971 s 56. Sch 9 13 13 Customs Corcelecton Act 1853 s 170-172. Bees das as Emergency Laws (Miscellaneous visions) Act 1947 Encouragement of Trade (1663) SUOUES es pi a 211 tes 308 Exportation (1793) Finance Act 1901 Sal 308 Pro- 308 lees dec: GUS (Bye 113 Lt} Finance Act 1959 Sch 8 Pili... ee Food and Drugs Act 1938 all) ae : Gaming Act 1845. ; Harbours, Docks and Pies Me SOON > Interpretation Act ‘1978 SO ne 23 (3) oe OMS ENS) 1, 1847 394 113 113 4 Limitation Act 1939 184 sea (LN 184 Limitation Act 1980 s 5 Marine ier and anon LO4 iasieanee, (War Risks) Act 1952. SH nee tae e Dep wena As e , CHG e merce Tt Ao Silt Me eK Sel (4 ieee, re . . 211, 505-509 ae e212 wavered gcoN e213 e et ae se oS thes Ved ep More PO sree us ore 2213 Pes Ho Mey PAGE perlite eee 7, 149, 225, 309, 484-501, 508 4, 7, 330 ae wn al e Ea 7 ath e Oe 8 Oe Uk Marine Insurance Act 1745 Marine Insurance Act 1906 sat Meine rears rans he Se k hati. ee une ey Cores e a Meh, an a Se weetO Meee Ae, eee 4 SD 4a OeliGs 30s 468 (2) . 12, 468 Beal) Or 123 (2) areal Gen ae. ee 27, 28, 110 (DN e iy ak Se Ae) ne ae en nO CL aes ta e Be ree. te 16, 26 9 (1) 26 (2) 465 10 27 11 23 122 de 20 14 (1) neg (2) 22, 24 (3 ad | bya Me 2) 16 7, 98, 99 (2 si iO) 18 ; il ( 4 39, Al,66, 68 (rh sy Ospek nc on ae Renee O ered (Bia ey e ea ery 82 PAD EERO 5D (as, ee 53 (5 54 LOM Sis LEN Pe hae re 41 10) es a RE 62, 15, 16, 310 (1) 71, 75, 78, 280 2) 72 4) io: 280 5) 72 6) 77 JA) ris a ea crit Co ec a a ad Qs e Pa te, e te OV RTL TT DB e gn. toga ials tie Manda te 6LO PAR AGBao (DANe e ein i Sun Se Mean arc 0| . xvi_ Table of statutes PAGE Marine Insurance Act Marine 1906—contd 1) s 25 26 — : * 96, 373 Ow Nn OO = Pes oOf=) Nowe a ee cee —~ —_ OONoe 09 Ww oooo . 280, 293, 310 310 311 eel 39 280, 282 . 281 ae? 36 287, 288 NE OHH NHK VEOH 286 ee 285 SOF ag 296 53, 299, 306 299 301 eS ~ 303, 304, 306 40 1307 Ss ey e296 307 Aa 296, 308, 309, 314 49 nic 43, 116, 118 BS) 197, 128 . 127 46. 117, 129 326 asl 1 a 180 . 67, 135 ES) 129 34 WN ae oPrwndre Or 130, 133,, 134,136, 138 SUE Sil. 2 53 Act 1906—contd SOSU2) heup co e ete fe eyo Oe Bae © ce, Ut aed ert. ote ey LEO 5) cy eengs Sey e ene erat eerie OO) (Uy S225 ers ee LOS 227, (2) =, eee 50, 142, 168, 194, 196, 27 HOBO BOON Ne cae Insurance 2» 138 316, 319 4 OS 315, 316, 317, 318 319 321 we oD 82, 86 228, 231, 232, 247, 248, 250, 254, 255, 256, 450 a ee ee Ce (5, RO See rere ee34) EAC See tas Ya eee 8) Cpe eR eg On te Pere Gs (Dt) . . ... 10, 165, 349, 346, 391 (OSio er eh . . 343 58... 5 ke eee BOs bsx. ccs gin ae , . 133393 60°. . . | MesOSmeetiscana76 (L)° 5 x eS) LO@850 "9625363" 364, 365, 366 (2). . a a. 4 1165, 362460365 366, 367, 374 6l. . . so 5 843, 364,365.08 75) 376, 378, 394, 440 Gh aaah a, See 364, 365 343, 382 385 387 . 389 a —nn. _ , 390,391, 392 343, 380, 382, 384 esse OMDNMDHWON 5 Rae a ne 68. bus on eS ee eee teres 1) cg. wo are Sao asee Dh) i SR Se ne 343, 417 1) eT SeOsaa, 2) Sw o 2. Oo mitic, hee ek lh eee TO 192, 194 192, 443 193, 344 . 344 185, 344 182, 183 Sq a ee 183 Nae eee Ree eee . 96, 405 ip ck > 4 VR bias aeosieas 685 <4 fe ee eh 407 69... ss ey cL RBA Oneogdos LO) 5. axes beeen Bi «okie wale p lb es ed Tee 403. 4 QM aon seg Th... 4 ce ge ees (BY (A\ok oe oe Je a mA TOU ON Sn Shh eset eee CIRO 3. e. Se tk e be ere TAS wveten =. an eee tee ede 75 Cla 58) aed Os te me eG 7 WONKH NOK NYE OOP SSO ee SS Table of statutes xvii PAGE PAGE Marine reapee s 76 Merchant uaa: Act 1894—contd Act 1906—contd . 4 430 417, 436 416 5 toe le 414, 440 eee akey: 220) ~ ~sloo} 417, 442, 446 nN 443 : cs 2sh 392 H BONED BONE : 231, 242, 442, 446, ER ROSS GEN EGE OT 450 OVO art eek nt ee) TOS OF GIEe ot re ha blak ® ato ADS 59) (Dy WAR ie toei Ba ee AAS 5 LAN 2\ aires t Sues Fike ol Sipe ptr. Berth tmictcecs &400459. Oe Meare ot iy cea) By lan Sale 2686 OS arate ns Cai th te het bonne: 8S; Oia meee Sp es ey oie fOn OF (6) ie ie Sacranctae nee icry Ae cenetO; 208 OONMEMEE Neen ye) ota Se RO BES. ge ip Se e aaa Re er s Cl) Soe eee oe 1329 Oe ers Sic SMES Sheng 136, 349, 387 OO MBPRET Mer tore niowe a or 4. OSS RM etna wie ile in. gl dd (ON Ga aie Sare ore, oes te eh (SOO pe e e407 322.001 One e oe Re el ae er en we Caer agOl 1 a om, eh) 2 Pe HS ey 3 . 115, 118, 330 SD A ea oe ae OOL, Gis. Oe a EE ora ee O30 6 : 130, 328, 330 7 141, 330 8 155, 330 Cincite ae mia recat : 152, 330 ORES reer Sega s pre O30 DEEPER COE PAEEL | 162, 165, 246, 330 NORE ay Litter earn ac OT, 330 [Smeets mr e e d et, Oelel 330) Aan ae! , 2 8 ere tay Ae ee el) [Dear eA oe e Acree 9, 107, 330 Glee yeas. Bee) ee nL075930 Lice Sh or hs 9, 107, 154, 326, 330 Marine Insurance (Gambling Policies) Act 1909 12, 503-504 sule(i)ee ae 125413 (NG) Wie: 3) Sepa) le t ahd (S)petenin es fase eee a 2 Merchant Shipping Act 1854 . 23, 193, 484 Merchant Shipping Act 1876 One 297 Merchant Shipping Act 1894 (31 Statutes Sia: soy Py MA Gey) BA ils ONE et = Wace kh a here CSPI an EM eee ae s\n eO. RST eta cdl 8hiden. a Aa! vant S-O44 oat (Caeamicer mieernneteckt i t TADie ene Merchant Suess Act 1979 Sadie ire eee OS, yoy.) a enliChe! ae? SG 297 Ministers of the Crows (aie o Functions) Act 1946 . . 509 Naval Prize Act 1864 (25 Statutes 910) . 126 Pacific Islanders 1872 . 308 Pacific Islanders Protection Act 1875 . 164 Policies Protection Act of Marine Assurance Act 1868 Se ae ae. Fe Gaeta sy Port of Baton Act 1842. 4 SOME A, Ua acter oh Pett er nt eae Wen0)- 8 Biizem(ly32)) meee ones 26 Restriction of Advertisement (War Risks Insurance) Act 1939 ecy e OUE) Revolted Colonies, Ayneries G776)m. Spl (I) (2) 58) eee fF 2 ~308 Sale of Goods Act 1979 . Rees etal SLO lesb rea . i es L619 oe Cari e Solara 39,46,48 . .. MW akvcwstee eee 818 Sale of Goods Act 1979 SIO ie Fee e G2) are aye 29 "483-484 Slave Trade (1791) Se page Stamp Act 1891 ia ds) SeOS mas Summer Tine Act 1972, Soa War eo eae Ee SS, 500, 508 ee a ame Die) a bed oltl} Risks Teentenee Act 1939: 211, 212, 509 AUSTRALIA Marine Insurance Act 1909 5S Ce i SO ea eee 28: 6S he Se ae eral GONG Nits 2a ate oy eee ade. 391 (GRR onts jee egerckeey 239, 392 BA it Ke) ES an ee. Se FO (T= (30) e n 2 pea ne yar sce ee e s 451 CANADA BRITISH COLUMBIA Marine Insurance Act Cee 1960 C 231) . 66, 310 s 20, 43 INDIA Marine Insurance Act 1963 Transfer of ee Act SulooAe : UNITED STATES OF AMERICA Tanker Act (46 US Code aap Reone nia SusOlatenn ee uk 458 458 S00) ‘pisses > MSeigl ne 908 ta?3 “Bae ig ses 7 ae on ; ne Puy, Taimv:siete 217 Sons « ‘ i : BGs at iy 3 x - j 2 > 7 Fie * ‘ 1 b=? 7‘ oFE: G i” 2 ai -: J ws a — ‘: = a oe ‘ 7 Table of cases ateaity PAGE Acanthus, The [1902] P 17, 71 LJP 14, 85 LT 696, 18 TLR 160,9 AspMLC 276 =,. 416, 421 Adamson v Newcastle SS Freight Insurance Association (1879) 4 QBD 462, 48 pie 670, 41 LT 160, 27 WR 818, 4 Asp MLC. 150, DC. HDS Adelaide SS Co v R (1923) 129 LT 161, 16 Asp MLC 178, 14 LIL Rep 341, HL é > PAOD) Admiral C, The. See Stolos Compania SA v Ajax Insurance Co Ltd, The Admiral C Admiralty Comrs v Brynawel SS Co Ltd (1923) 40 TLR 78,17 LIL Rep89_ 202 African Merchants Co v British and Foreign Marine Insurance Co (1873) LR 8 Exch 154, 49 LJ Ex 60, 28 LT 233, 21 WR 484, 1 Asp MLC 558, Ex Ch : 132 Agenoria SS Co Ltd v Merchants Marine Insurance Co Ltd (1903) 19 TLR 442, 8 Com Cac DP es : sea 22 Aifanourios, The. See West Bi Scotland Ship Cee Mutual Procian and Tedeniety Association (Luxembourg) v Aifanourios Shipping SA, The Aifanourios Aitchison v Lohre (1879) 4 App Cas 755, 49 LJQB 123, 41 LT 323, 28 WR 1, 4 Asp MLC 168, HL ; : ; 193, 375, 379, 420, 443 Ajum Goolam Hossen & Co Vv Wiion Marine ipsarance Co [1901] AC 362, 70 LJPC 34, 84 LT 366, 17 TLR 376, 9 Asp MLC 167, PC . ; 208 Al-JubailIV, The. See Almojil (M) Establishment v Malayan Motor and General Underwriters (Private) Ltd, The Al-Jubail IV Aldridge v Bell (1816) 1 Stark 498. : j : : : ; 5 Alexander v Campbell (1872) 27 LT 462, 1 Asp MLC 447 : i 5 fests) ls Allagar Rubber Estates Ltd v National Benefit Assurance Co Ltd (1922) 10 Ll L Rep 564: 8, 123 Allden v Raven, The Kylie [1983] 2 Lloyd’s Rep 444 . ‘ ‘ . 53,60, 66 Allgemeine Versicherungs-Gesellschaft Helvetia v German Property Administratot [1931] 1 KB 672, 100 LJKB 290, 144LT 705,CA 393 Allison v Bristol Marine Insurance Co (1876) 1 App ore 209, [1874 eeAllEReb 781, 34 LT 809, 24 WR 1039, 3 Asp MLC 178, HL . ; : : 2135 Alluvials Mining Machinery Co v Stowe (1922) 10 LI L Rep 96 : ; : . 65, 81 Almojil (M) Establishment v Malayan Motor and General Underwriters (Private) Ltd, The Al-Jubail IV [1982] 2 Lloyd’s Rep 637 : : de , G13 85,295), 30683135322 Alps, The [1893] P 109, 62 LJP 59, 68 LT 624,41 WR 527,9 TLR 285, 7 AspMLC 337,1R SST wE ; 229, 267, 428 Alston v Campbell (1779) 4 Bro Parl on 476, HL é ; a 425. American Employers Insurance Co v St Paul Fire and Marine inane Co Ltd [1978] 1 Lloyd’sRep417__.. : QT. Amin Rasheed Shipping Corpn v Kuwait iairance Co [1982] 1 WLR 961, 126 Sol Je 343, [1982] 1 Lloyd’s Rep 638; affd. [1983] 1 All ER 873, [1983] 1 WLR 298, 127 SolJo 51, [1983] 1 Lloyd’s Rep 235, CA; affd. [1984] AC 50, [1983] 2 All ER 884, [1983] 3 WLR 241, 127 SolJo 492, [1983] 2 Lloyd’s Rep 365, HL : 103 Anderson v Morice (1875) LR 10 CP 609, 44 LJCP 341, 33 LT 355, 24 WR 30, 3 ine MLC 31, Ex Ch; affd. sub nom. Anderson v Morice, Morice v Anderson (1876) 1 App Cas 713, 46 LJQB 11, 35 LT 566, 25 WR 14, 3 Asp MLC 290, HL ; ; . 26, 28, 298 Anderson v Ocean SS Co (1884) 10 App Cas 107, 54 LJQB 192, 52 LT 441, 33 WR 433, 5 Asp MLC 401, HL : 444 Anderson v Pacific Fire and Marine Phas 280, 1 Asp MLC 220 : : : Co (1 872)LR 7 cP 65, 26 LT ‘130, 20 WR 3 : me 14 xix ny xx Table of cases PAGE Anderson v Pitcher (1800) 2 Bos & P 164 . Anderson v Royal Exchange Assurance Co (1805) 7 East 38, 3Smith KB 48 : 2 Anderson v Wallis (1813) ‘ 72, 286 : 332, 350, 379, \ 2M & S 240,3 Camp 440. : é 4 413 LO. : Andrews v Mellish (1814) 5 Taunt 496, ExCh . : 5 Angel v Merchants Marine Insurance Co [1903] 1 KB 811, ‘[1900- 3] All ER ree 952, 72 lei LJKB 498, 88 LT 717, 51 WR 530, 19 TLR 395, 9 ae MLC 406, 8 Com Cas 179, CAPs ; ; 97, 374 Angerstein v Bell (1795) 1 Park’s Marine freee 7thed 55 : 5 a t20 Anghelatos v Northern Assurance Co Ltd (1924) 40 TLR 813, 68 Sol Jo 812, 30.Com Cas 31, 19 LIL Rep 255, HL 5 : Be) PISS P4483 Anghelatos and London Joint City fad Midland Bank VvNorthern Asupaece Co (1922) 13 LI L Rep 291, CA : ; : E 2 a 3975400 Annen v Woodman (1810) 3 Taare 299 : : ; e UNO) Apollinaris Co v Nord Deutsche Insurance Co [1904] 1‘KB 252, 73 KB 62, 89 LT 670, 52 WR 174, 20 TLR 79, 9 Asp MLC 526,9ComCas91 : 5h Oe YAD) Arcangelo v Thompson (1811) 2 Camp 620 5 e207, Aries Tanker Corpn v Total Transport Ltd, The Aries 11977] 1 AllER 398, 9771WLR 185, 121 SolJo 117, [1977] | Lloyd’s Rep 334, HL : ; 19 Armar, The. See Compania Maritima Astra SA v Archdale, The Annee Armet v Innes (1820) 4 Moore CP 150 é 131 Aron (J) & Co v Miall (1928) 98 LJKB 204, [1928] All ER Rep 655, 139 LT 562, 34 Can Cas 18, 17 Asp MLC 529, 31 LIL Rep 242,CA se E3195320 Aronsen (Oscar L) Inc v Compton, The Megara [1973] 2 Loves, Rep 361; ad [1974] 1 Lloyd’s Rep 590. ite t Chey’2010! Arrow Shipping Co v Tyne Tprevenent Conta ThE Crystal [1894] AC 508,63 LJP 146, 71 LT 346, 10 TLR 551, 7 Asp MLC 513, 6 R 258, HL . 393 Asfar & Co v Blundell [1895] 2 OB 196, 64 LJQB 573, 1 Com Cas 15, 15 R 481; affd. [1896] 1 QB 123, 65 LJQB 138, 73 LT 648, 44 WR 130, 12 TLR 29, 40 SolJo 66, 8 Asp MLC 106, 1 Com Cas 185,CA . + 19; 20,50; 515,52, 95; 262,350, 352 Assicurazioni Generali and Schenker & Co vSS Beste Morris Co Ltd and Browne [1892] 2 QB 652, 61 LJQB 754, 67 LT 218, 41 WR 83, 8 TLR 715, 36 SolJo 682, 7 Asp MLC 217,4R 33,CA_ . 354 Assicurazioni Generali De Tries v Empires Assurance Gent Ltd [1907] 2 KB 814, 76 LJKB 980, 97 LT 785, 23 TLR 700, 51 Sol Jo 703, 10 Asp MLC 577, 13 Com Cas 37 ; : 460 Associated Oil Carriers Ltd Vv ain lnsueanee Secieas of Cantor Ltd [1917] 2 KB 184, 86 LJKB 1068, 116 LT 503, 33 TLR 327, 14 Asp MLC 48, 22 Com Cas: 346. . 44, 59, 384 Astrovlanis Compania Naviera SA v Linard (The Gold Sky) [1972] 2 QB 611, [1972] 2 All ER 647, [1972] 2 WLR 1414, 116 SolJo 176, [1972] 1 Lloyd’s Rep 331, CA : ess Astrovlanis Compania Naviera SA v Linard, The Gold Sky [1972] 2 Lloyd’s Rep 187 enzo, 242, 247, 449 Athel Line Ltd v Liverpool and London War Risks Insurance Association Ltd [1946] KB 117, [1945] 2 All ER 694, 115 LJKB 141, 174 LT 81,62TLR 81, 79 LI L Rep 18, CA . 200 Athens Maritime Enterprises Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd [1983] QB 647, [1983] 1 All ER 590, [1983] 2 WLR 425, 126 SolJo 577, [1982] 2 Lloyd’s Rep 483. 157 Atlantic Maritime Carriers SA.VvHelienic Mural War Res Agsoeiauion Ltd [1968] 2 Lloyd's Rep 124; on appeal sub nom. The Mitera (1969) 113 Sol Jo 282, [1969] 1 Lloyd’s Rep 359, CA 4 223 Atlantic Maritime Co jc VvGibbon 11954] l QB 88, [1953] 2 All ER 1086, 1953] 3 WLR 714, 97 SolJo 760, [1953] 2 Lloyd’s Rep 294,CA . : : - 103, 262, 264, 265, 408 Atlantic Transport Co v R, The Maryland (1921) 9 LIL Rep 370 . ; - 199 A-G v Ard Coasters Ltd, Liverpool and London War Risks Insurance Asccciation Ltd v SS Richard de Larrinaga Marine Underwriters [1921] 2 AC 141, 91 LJKB 31, 125 LT 548, 37 TLR 692, 15 Asp MLC 353, 26 Com Cas 352, HL. : a LO9N205 A-G v Glen Line Ltd and Liverpool and London War Risks Tasuranee ecrision Ltd (1929) 34 Com Cas 309, CA; revsd. sub nom. Glen Line Ltd v A-G a) 46 TLR 451, 36 Com Cas 1, 37 LIL Rep 55, HL : : j . 393, 456, 457, 465 Table of cases xxi PAGE Australasian Insurance Co v Jackson (1875) 33 LT 286, 3 Asp MLC 26, PC : . 164, 308 Australasian Steam Navigation Co v Morse (1872) LR 4 PC 222, 8 Moo PCCNS 482, 27 LT 357, 20 WR 728, 1 Asp MLC 407 3 5 : , . Australian Agricultural Co v Saunders (1872) ceedin 28 LT 844; aff. (1875) LR 10 CP 668, 44 LJCP 391, 33 LT 447, 3 Asp MLC 63, ExCh . 349 133 Australian Coastal Shipping Commission v Green [1971] QB 456, [1971] | ‘All ER 353, [1971] 2 WLR 243, 115 SolJo 57, [1971] 1 Lloyd’s Rep 16,CA ; > 187 Bah Lias Tobacco and Rubber Estates Ltd v ae Insurance Co Ltdseg 3 LI L Rep 155, P02" : : e l26 Bain v Case (1829) 3C & P 496, Mood & M 262 136 B ma : : 5 : = Baines v Holland (1855) 10 Exch 802, 3 CLR 593, 24 LJ Ex 204 A ; : : = 285 Baines v Woodfall (1859) 6 CBNS 657, 28 LJCP 338,6 Jur NS19 . E = 783 Baker v Adam (1910) 102 LT 248, ee All ER oS 632, 15 Com Cas 227, 11 Aw MLC 308 = An , : -» 39,320 Baker v Towry (1816) l Stark 436 i 3 Baker-Whiteley Coal Co v Marten (1910) 26 TLR 314 3 ; ; : 3 i . y 411 413 Balmoral SS Co v Marten [1901] 2 KB 896, 70 LJKB 1018, 85 LT 389, 50 WR 35, 17 TLR 765, 9 Asp MLC 254, 6 Com Cas 298, CA; affd. [1902] AC 511, [1900-3] All ER Rep 961, 71 LJKB 819, 87 LT 247, 18 TLR 802, 9 Asp MLC 321, 7 Com Cas 292, HL BOM, 437 Bamburi, The [1982] 1 Lloyd’sRep312. : 367, 371, 377 Banco de Barcelona v Union Marine Insurance Co Ltd (1925) 134 LT 350, 69 SolJo 747, 16 Asp MLC 604, 30 Com Cas 316, 22 LI L Rep 209, 317; on appeal 23 LI L Rep 55, 214, GAY 238 Bank of Athens v Royal Be chaber hee The Efyehia (1937) 57 Ll mn Rep Sie aff. 59 LiL Rep67,CA_ . 241 Bank of New South Wales v South Beitsh eeacee Co Ltd (1920) 4 LIL Rep 266 : » elle Banque Monetaca and Carystuiaki v Motor Union Insurance Co Ltd (1923) 14 LI L ae 48 : Barber VvFiemiue (1869) LR5 QB 59, 10 B &S 879, 39TJQB 29; 18 WR 254 : Barber v Fletcher (1779) 1 Doug KB 305 Barclay v Cousins (1802) 2 East 544 . 3 : : eieal'56 te 21 ; ; : j : : ; ; 5 131, 395, 396 : : ; : . : : . : : 5 a ; : 282, 286, 287 ‘ aged Pl . 4,102, 433 f : Barclay v Stirling (1816)5M&S6. : Baring v Christie (1804) 5 East 398, | Smith KB 462 : Baring v Clagett (1802) 3 Bos & P 201 : Baring v Henkle (1801) 1 Marshall on Marine fee 3rd ed 232 Baring Bros & Co v Marine Insurance Co (1894) 10 TLR 276,CA Barker v Blakes (1808) 9 East 283. et sn 8 a20 286 eters) Barker v Janson (1868) LR 3 CP 303, 37 LJCP 105, 17 i 473, = WR 399, 3 Mar LC 28 : : é 94, 346 Barrow v Bell (1825) 4 B &C 736, 7 Dow & Ry KB 244, 4 LJOSKB 47 on ; . 412 Bartlett v Pentland (1830) 10 B & C 760, [1824-34] All ER Rep 144, L & Welsb PRI Ke LJOSKB 264 Z : . = Od. Bates v Hewitt (1867) LR 2 QB 595; 36 LJQB 282, 15 WR 1 172 5 c : . 46,50, 56 Beatson v Haworth (1796) 6 Term Rep 531 : : . 130 Becker, Gray & Co v London Assurance Corpn [1918] ‘AC 101, [1916-17] All ER Rep 146, 87 LJKB 69, 117 LT 609, 34 TLR 36, 62 Sol Jo 35, 14 Asp MLC 156, 23 Com Cas 205, HL . 230, 264 Beckett v West of England Marine fanivance Co Ltd (1871) 25 LT 739, l AspMLC M SSeS Beckwaite v Nalgrove (Unreported) cited in (1910) 3 Taunt 41 : : woe Beckwith v Sydebotham (1807) 1 Camp 116 ; oz Bedouin, The [1894] P 1, 63 LJP 30, 69LT 782, 42 WR 299, 10 TLR 70,7 Asp MLC 391, 6 R693,CA_ . A 92573; 2295 428 Belcher v Capper (1842) 4 Man &G 502, 5Scott NR 257, 11 Lop: 274 c : : 163 Bell v Bell (1810) 2 Camp 475 3 Bell v Bromfield (1812) 15 East 364 . Bell v Carstairs (1810) 2 Camp 543 . Bell v Carstairs (1811) 14 East 374. : : b 5 . : : : ae : : : PNYOSI21 . 287 5 ths) oF 232 ; : ; : ; : ; : : ; : : : : : : \ xxil Table of cases PAGE Belle of Portugal, The. See Rosa v Insurance Co of the State of Pennsylvania, The Belle of Portugal Benlarig, The (1888) 14 PD 3, 58 LJP 24, 60 LT 238, 6 Asp MLC 360. 443 Bennett SS Co v Hull Mutual SS Protecting Society [1914] 3 KB 57, 83 LJKB 1179, Hl LT 489, 30 TLR 515, 12 Asp MLC 522, 19 Com Cas 353, CA : 172 Bensaude v Thames and Mersey Marine Insurance Co [1897] AC 609, [1895— 9]All ER Ron 256, 66 LJQB 666, 77 LT 282, 46 WR 78, 13 TLR 501, 8 Asp MLC 315, 2 Com Cas 238, HE: : 230, 262, 281 Benson v Chasen (1849) 2 HL Cas 696, 8CB 950, 13 Jur 696, HL. ‘ a) OO Bergens Dampskibs Assurance Forening v Sun Insurance Office Ltd (1930) 143 ible 435, 46 TLR 543, 74 SolJo 568, 18 Asp MLC 172,37 LIL Rep175__ . Berger and Light Diffusers Proprietary Ltd v Pollock [1973] 2 Lloyd’s Rep 442 470 ~ 40,41, 56, ep 4 20S ae0 a OXaii 57, 62, 67, 97, 99, 350 Berk (F W) & Co Ltd v Style [1956] | QB 180, ies 3 AI ER 625,Erk 3 WLR 935, 99 SolJo 889, [1955] 2 Lloyd’s Rep 382 . Bernardi v Motteux (1781) 2 Doug KB 575 . ‘ ; : : ; : ; Berthon v Loughman (1817) 2 Stark 258. 5 = Biccard v Shepherd (1861) 14 Moo PCC 471, sub nom. ‘Commercial Marae Co Vv Namaqas Mining Co 5 LT 504, 10 WR 136, 1 MarLC165,PC Bird v Appleton (1800) 8 Term Rep 562. . é : 4 9 : 299302 é . 288, 309 Bird v Brown (1850) 4 Exch 786, 19 LJ Ex 154, 14 LTOS 399, 14Jur 132. : 7 Bird’s Cigarette Manufacturing Co Ltd v Rouse (1924) 19 LIL Rep 301 Birkley v Presgrave (1801) 1 East 220 , . 5 : 3 62, Zo15 291 : . 344 Birrell v Dryer (1884) 9 App Cas 345, 51 LT 130, 5 Asp MLC 267, HL : Bishop v Pentland (1827) 7B & C219, | Man & Ry KB 49, 6 LJOSKB 6 é : : he geno28 231, 4b . me e39 Blackburn v Haslam (1888) 21 QBD 144, 57 LJQB 479, 59 LT 407, 36 WR 855, 4 TLR 577, 6 Asp MLC 326, CA : 43 Black King Shipping Corpn v Massie, The Litsion Pride (1984) Times, 17 December 38h Blackburn v Liverpool, Brazil and River Plate Steant Noviendon Co [1902] 1 KB 290, [1900- 3] All ER Rep 67, 71 LJKB 177, 85 LT 783, 50 WR 272, 18 TLR 121, 9 Asp MLC 263, 7 Com Cas 10 3 Blackburn, Low & Co v Winer (1887) 12 Ag Cas 531, 57 LJQp114, 57 LT 730, 36 WR 449, 3 TLR 837, 6 Asp MLC 216, HL , ; Blackenhagen v London Assurance Co (1808) 1 Camp 454 é : 143 41, 43 72230 Blackett v Royal Exchange Assurance (1832) 2 Cr & J 244, [1824 34] All ER Rew 468, 2 Tyr 266, | LJ Ex 101 ; : 326, 328, 414 Blackett, Magalhaes and Colombie vNational Bench eee 293, CA : é : se Corpn(1921) 8 LIL ae! : Blackhurst v Cockell (1789) 3 Tern Rep 360 : Blairmore Co Ltd (Sailing Ship) v Macredie [1898] AC 993; 79 LT PA Mee 14 TLR 513, 8 hoe 307 285 MLC 429, 3 Com Cas 241, sub nom. The Blairmore 67 LJPC 96, HL 376 Blane Steamships Ltd v Minister of Transport [1951] 2 KB 965, [1951] 2 TLR 763, 95 Sol Jo 577, [1951] 2 Lloyd’sRep155,CA 394 Blower v Great Western Rly Co (1872) LR 7 CP 655, 41 LJCP 268, 26 LT 883, 36JP 792, 20 WR 776 ‘ 250 Boag v Standard Marine inceance Co Ltd [1937] 2 KB 113, [1937] 1 All ER 714, 106 LJKB 450, 156 LT 338, 53 TLR 414, 81 SolJo 157, 19 Asp MLC 107, 42 Com Cas 214, 57 LI L Repa3GA. 3. | MR eit are AOS Wed OA osu LOS Board of Trade v Hain SS Co [1929] AC 534, [1929] All ER Rep 26, 98 LJKB 625, 141 LT 435, 45 TLR 550, 18 Asp MLC 15, 35 Com Cas 29, HL . 200 Bolivia Republic v Indemnity Mutual Marine Assce Co Ltd [1909] 1 KB 785, 99 LT 394, 24 TLR 724, 11 Asp MLC.117; affd. [1908-10] All ER Rep 260, 78 LJKB 596, 100 LT 503, 25 TLR 254, 53 SolJo 266, 11 Asp MLC 218, 14 Com Cas 156,CA . 41,42, 46, 154, 156 Bond v Nutt (1777) 2 Cowp 601 ‘ A : : ; 3 ; : ; . 280 Bondrett v Hentigg (1816) Holt NP 149. ; . 144, 156 Boon and Cheah Steel Pipes Sdn Bhd v Asia Insurance Co Ltd [1975] 1 Lloyd’s Ren bye Beale 350, 363, 374 Booth v Gair (1863) 15 CBNS 291, 3 New Rep 121, 33 saliio 9 LT 386,ere NS 1326, 12 WR 105, | Mar LC 393. 5 ’ j 444 Table of cases xxiii PAGE Boston Corpn v Fenwick & Co Ltd (1923) 129 LT 766, [1923] All ER Rep 583, 39 TLR 441, 16 Asp MLC 239, 28 Com Cas 367, 15 LI L Rep 85 3 394 Bosworth (No 3), The (1962). See Grand Union (Shipping) Ltd v onden ss Gane Mutual Insurance Association Ltd, The Bosworth (No 3) Bottomley v Bovill (1826) 5 B & C 210, 7 Dow & Ry KB 702, 4 LJOSKB 237... 131, 132, 166 Bouillon v Lupton (1863) 15 CBNS 113, 2 New eee 393, 33 LJPC 37, 8 LT 575, 10 Jur NS 422, 11 WR 966, 1 Mar LC 347 “ 283 Boulton v Houlder Bros & Co [1904] 1 KB 784, 73 LJKB 493, 90 LE 621, 52 ‘WR 388, 20 TLR 328, 48 SolJo 310, 9 Asp MLC 592, 9 Com Cas 182,CA. ; 3 a 897540) Bousfield v Barnes (1815) 4 Camp 228 : : : : ; ; 93, 461 Bousfield v Creswell (1810) 2Camp 545. : é 5 : : : ‘ oe Bowden v Vaughan (1809) 10 East 415. Bowring (C T) & Co Ltd v Amsterdam onde SHUG) : Boyd v Dubois (1811) 3 Camp 133 , 5 ; : ; Sethe) Co Ltd (1980): 36 Ll L Rep eres ; ; : 325] ee bok 250 Braconbush, The. See United Scottish Insurance Co Ltd:VvBritish Fishing VesselsMutual War Risks Association Ltd, The Braconbush Bradford v Levy (1825) 2C & P137,Ry & M 331 ; Bradford v Symondson (1881) 7 QBD 456, 50 ne 582, 45 LT 364, 30 WR 27, 4 AspMLC 455, CA ‘ «7 166 Bragg v Anderson (1812) 4 Tae 229 : 3 e Brandeis Goldschmidt & Co v Economic Grantanee Co Ltd (1922) 38 TLR 609, 11 LIL Rep se 42 : 2 2386 | 18351186 Brankelow SS Co vTCjnion insarance Office [1899] 2 QB 178, CA; affd. sub nom. Williams & Co v Canton Insurance Office Ltd [1901] AC 462, 70 LJKB 962, 85 LT 317, 17 TLR 696, 9 Asp MLC 247, 6 Com Case 256, HL . ‘ 5 Sl Brede, The. See Henriksens Rederi A/S v T H Z Rone. The Brede (1972) (1974) Brentwood, The. See Coast Ferries Ltd vy Century Insurance Co of Canada, The Brentwood BridgesvHunter (1813) 1M &S15 é 44, 55, 57, 78 Briggs v Merchant Traders’ Association (1849)13 QB167, 18 LJQe 178, 13 LTOS 68, 13 Jur 787 : F se Brine v Featherstone (1813) 4 Tacit 869 : j Bristol SS Corpn v London Assurance and Limad. The Delfin [1976] 2 Toya: Ren 741 « 5 20 -74 PD, 324, 325 Britain SS Co Ltd v R [1921] 1 AC 99, 89 LJKB 881, 123 LT 721, 36 TLR 791, 64 SolJo 737, 15 Asp MLC 58, 25 Com Cas 301, HL : : é : : ; 198, 203, 204 British American Tobacco Co v Poland (1920) ; on appeal (1921) 7 LIL Rep 108, CA 5 British and Burmese Steam Navigation Co Ltd v Liverpool and London War Risks Insurance Association Ltd and British and Foreign Marine Insurance Co Ltd (1917) 34 TLR 140 : ; : 5 j : : ; : : : 3 F : a NES PAI British and Foreign Insurance Co Ltd v Wilson Shipping Co Ltd [1921] 1 AC 188, [1920] All ER Rep 560, 89 LJKB 981, 123 LT 756, 36 TLR 890, 65 ae 25, 15 Asp MLC 114, 26 Com Cas 13, 4 LI L Rep 197, 371, HL : 440 British and Foreign Marine Insurance Co v Gaunt [1921] 2 AC 41, [1921] All ER Rep 447, 65 SolJo 551, 15 Asp MLC 305, 26 Com Cas 247, 7 Ll L Rep 62, HL . 8,107, 154, 178, 179, 326, 448, 449 British and Foreign Marine Insurance Co Ltd v Samuel Sanday & Co [1916] 1 AC 650, [1916-17] All ER Rep 134, 85 LJKB 550, 114 LT 521, 32 TLR 266, 60 SolJo 253, 13 Asp MLC 289, 21 Com Cas 154,HL . . 45,59, 106, 264 British Dominions General Insurance Co Ltd v Duder [1915] 2 KB 394, [1914-15] All ER Rep 176, 84 LJKB 1401, 113 LT 210, 31 TLR 361, 13 i MLC 84, 20 Com Cas 270, CAG 466 Broderick v Halines wend: SeeHoihardodh VvBrodaek Brooking v Maudslay, Son and Field (1888) 38 Ch D 636, 57 3 Ch 1001, 58 LT 852, 36 WR 664, 4 TLR 421, 6 Asp MLC 296 ‘ 5; ; a Wee Brooks vyMacDonnell (1835) 1 Y & C Ex 500, 4 LJ Ex Bq60 : s ‘ . . 457 Brotherston v Barber (1816) 5M &S418 . : ; 3 : ‘ ¢ oe es Brough v Whitmore (1791) 4 Term Rep 206 : , c c ; ; 102,325 Brown v Smith (1813) 1 Dow 349, HL : ; . 156, 168 Brown v Stapyleton (1827) 4 Bing 119, 12 Moore cP 334, 5 LJOSCP 121 : : - 108 xxiv Table of cases PAGE Brown v Tayleur (1835) 4 Ad & El ce 1 Har & W 578, 5 Nev & MKB 472, 5 LJKB LO lS1 Pe ; 9 57 Brown v Tierney (1809) 1 Taunt 51 7 : ‘ ; : ‘ ‘ Paha 7 Si Brown v Vigne (1810) 12 East 283. ey 20 Bruce v Jones (1863) 1 H & C769, 1 New Rep 333, 32 LJ Ex 132, i LT 748, 9 JurNS 628, 11 WR 371, 1 Mar LC 280 . f - 461 Bruns v Colocotronis, The Vasso [1979] 2 Lisyas Rep 412 : : : : Heels Bryant and May Ltd v London Assurance Corpn (1886) 2 TLR 591 Buchanan & Co v Faber (1899) 15 TLR 383, 4 Com Cas 223 : é . : . 413 26, 299 Buckley v Gross (1863) 2 B & S 566, [1861-73] All ER Rep Ext 1844, 1 New! nePe357, 32 LJQB 129, 7 LT 743, 27 JP 182, 9 Jur NS 986,11 WR465__. : . Bullen v Denning (1826) 5 B & C842, 8 Dow & Ry KB 657, 4 LJOSKB 314 : : e Burges v Wickham (1863) 3 B & S 669, 33 LJQB 17, 8 LT 47, 10 Jur NS 92, 11 WR 992, 1 Mar LC 303. 436 S22 297 Burnard v Rodocanachi (1882) 7 oe Cas 333, 51 LJQe 548, 47 LE 277, 31 WR 65, 4 Mop MLC 576, HL ; Burnett v Kensington (1797) 7 loan Rep 210 : : . : ; Pals 456 Burton v English (1883) 12 OBD 218, 53 LJQB 133, 49 LT 768, 32 WR 655, 5 AspMLC 187, CA ; : lod Busk v Royal Exchange Ascaris Co (1818) 2B & Ald TSS : ; ; 150, 231 Butler v Wildman (1820) 3 B & Ald 398, [1814-23] All ER Rep 748 : : ‘ Palos C CVG Siderurgicia del Orinoco SA v London SS Owners’ Mutual! Insurance Association Ltd, The Vainqueur José [1979] 1 Lloyd’s Rep 557 5 ! 5 ; 2 a 2LONa TS Cachapool, The (1881) 7 PD 217, 46 LT 171, 4 Asp MLC 502 : 7) 284 Caine v Palace Steam Shipping Co [1907] 1 KB 670, 76 LJKB 292, 96 LT 410, 23 TLR 203, 51 Sol Jo 170, 10 Asp MLC 380, 12 Com Cas 96 CA; affd. sub nom. Palace Shipping Co Ltd v Caine [1907] AC 386, 76 LJKB 1079, 97 LT 587, 23 TLR 731, 51 SolJo 716, 10 Asp MLC 529, 13 Com Cas 51,HL . : 309 Callander (or Callender or Callendar) v Oelrichs (1838) 5 Bing NC 58, 1 AGA 401, 6 Scott 761, 8 LJCP 25, 4 LT 341, 2Jur 967 . ; Calmar SS Corpn v Scott, The Poremar [1953] 1 Lloyd's Rep 485 Cambridge v Anderton (1824) 2 LJOSKB 141 : 2B & : : , oo . 104 C691,1C & P 213, 4 Dow & a KB 203, Ry & M 60, : om OFOnS ou Camden v Anderson (1798) 1 Bos & P 272 Camden v Cowley (1763) | WmBI1417_ Camelo v Britten (1820)4B& Ald 184. : : : 3 5 3 : : 5 ; : : A ‘ : ; E ; 5 : : enue o . ay) SLANG 308 Campbell v Christie (1817) 2 Stark 64 : Campbell v Innes (1821) 4B& Ald 423. : 4 : : : : : By Sel WARS) ess) Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd 11941] AC 55, [1940] 4 All ER 169, 110 LJPC 1, 164 LT 367, 57 TLR 41, 85 aS 92, 46 Com Cas 74, 19 Asp MLC 391, 67 LI L Rep 549, PC : : . 143,147 Canning v Matitime Insurance Co Ltd (1936) 56 Ll L Rep 91 : . 240 Cantiere Meccanico Brindisino v Janson [1912] 3 KB 452, 81 LJKB 1043, 107 LT 281, 28 TLR 564, 57 SolJo 62, 12 Asp MLC 246, 17 Com Cas 332, CA . 47, 50, 53,54, 74, 297, 302 Cape Borer, The. See Rudolph (M J) Corpn v Lumber Mutual Fire Insurance Co (Luria International, Third Parties), The Cape Borer Capetandiamantis Compania Maritima SA, Eastern Seas Transport Corpn and Orient Shipping Corpn v Hellenic Mutual War Risks Association Ltd [1968] 2 Lloyd’s Rep ae on appeal sub nom. The Mitera (1969) 113 Sol i 282, [1969] Lloyd’s Rep 359, 223 eee Cantal Shispive ohm Be Bulk Towing Caron Vv Hartiord Fire Insueance Co (United States of America, Third Party), The Christie [1975] 2 Lloyd’s Rep 100 eHtGls 249, 295, 298, 313, 329 Caribbean Sea, The. See Prudent Tankers Caribbean Sea Ltd SAv Dominion Insurance Co Ltd, The Table of cases xxv PAGE Caroline, The (1921) 37 TLR 617, 7 LI L Rep 56 : a leg Carr v Royal Exchange Aceranee Corpn (1864) 5B&S 941, 5 New Rep 216, 34 LJQB 2 11 LT 595, 11 Jur NS 265, 13 WR 204,2 MarLC 160 . 328 Carras v London and Scottish Assurance Corpn Ltd [1936] 1 KB: 291, [1935] ‘All ER Rep 246, 105 LJKB 689, 154 LT 69, 52 TLR 123, 41 Com Cas 120, 18 Asp MLC 581, CA. ‘ ioe 3549361 Carruthers v Sheddon (1815) 6Raunt 14, 1“Marsh 416 ; ; ‘ : i 24, 111 Carruthers v Sydebotham (1815)4M&S77 ; : : : : : . 411 Carter v Boehm (1766) 3 Burr 1905, 1 Wm BI 593 é é : > 46,50, 79 Carter v Royal Exchange Assurance (prior to 1746) cited in 2Stra 1249 5 : Sieg 10) Case v Davidson (1816) 5 M & S 79; affd. sub nom. Davidson v Case (1820) 2 Brod & Bing 379, 8 Price 542, 5 Moore CP | 16, Ech : : PEN SOB L395 Caspian Sea, The. See Montedison SpA v Icroma SpA, The Capon Sea Castle Insurance Co Itd v Hong Kong Islands Shipping Co Ltd, The Potoi Chau [1984] AC 226, [1984] 3 All ER 706, [1983] 3 WLR 524, 127 Sol fe 616, ed 2 hia oe SO a 185 Castrique v Imrie (1870). See Imre Vv1Casudaue (1860) Cater v Great Western Insurance Co of New York. See Cator v Great Western Insurance Co of New York Cates (Captain JA) Tug and Wharfage Co Ltd v Franklin Insurance Co [1927] AC 698, 96 LJPC 132, 137 LT 709, 17 Asp MLC 819, 28 LI L Rep 161, PC : : 347, 376, 390 Cator v Great Western Insurance Co of New York (1873) LR 8 CP 552, 29 LT 136, 21 WR 850, 2 Asp MLC 90, sub nom. Cater v Great Western Insurance Co of New York 42 LJCP 266. 227 Chandler v Blogg [1898] i QB 325 67 LJQB 336,7 LT 524, 14 TLR 66, 8 ne MLC 349, 3 Com Cas 18 . a 172, 173, 414 Chandris v Argo eae Co Ltd (1963) 107 Sol Jo 575, [1963] 2 Lloyd’ sRep Caine Charente SS Co Ltd v Transports Director (1922) 10 LI L Rep 514, 38 TLR 434,CA . Charlesworth v Faber (1900) 5 Com Cas 408 4 3 LO a 200 46, 466 Charlotte, The [1908] P 206, 77 LJP 132, 99 LT 380, 24 TLR 416, I1 ie MLC 87,CA . Chaurand v Angerstein (1791) Peake 43. j OY Cheshire (T) & Co v Thompson (1919) 35 TLR 31de 24 Com oe 198, CA ; ie Cheshire (T) & Co v Vaughan Bros & Co [1920] 3 KB 240, 89 LJKB 1168, 123 LT 487, 84 458 a SO JP 233, 15 Asp MLC 69, 25 Com Cas 242, 3 LI L Rep 213, CA 5 . 13,14, 36, 468 China (Republic of), China Merchants Steam Navigation Co and United States of America v National Union Fire Insurance Co of Pittsburgh, Pennsylvania, The Hai Hsuan [1958] 1 Lloyd’s Rep 351,CA_ . 5 ae167,.199 China (Republic of), China Merchant Steam avieracn 185 Ltd Pad United States of America v National Union Fire Insurance Co of Pittsburgh, Pennsylvania, The Hai Hsuan (No 2) [1958] 2 Lloyd’s Rep 578 : 13 China SS Co v Commercial Assurance Co (1881) 8 QBD 142, 51 LJQB 132, 45 LT 647, 30 WR 224, CA ; 401 China Traders’ Insurance Co Ltd Vv Royal change Assubanes Conn [1898] 9 QB 187, 67 LJQB 736, 78 LT 783, 46 WR 497, 14 TLR 423, 42 SolJo 507, 8 Asp MLC 409, 3 Com Cas 189,CA. : : 40, 401 Chippendale v Holt (1895) 65 LJQB 104, 73 LT 472,44 WR 128, 12 TLR 50, 40 SolJo 99, 8 Asp MLC 78, 1 Com Cas 197. : 465 Christie, The. See Capital Coastal Shipping Coron and ‘Bulk Tabane Gorn Vv Hartford Fire Insurance Co (United States of America, Third Party), The Christie Clan Line Steamers Ltd v Board of Trade, The Clan Matheson [1929] AC 514, [1929] All ER Rep 17, 98 LJKB 408, 141 LT 275, 45 TLR 408, 18 Asp MLC 1, 35 Com Cas 15, 34 LiL Repl; HL — . 204 Clan Line Steamers Ltd v gerne! nee inden War Rida rasihanes Acoaeuion Ltd [1943] KB 209, [1942] 2 All ER 367, 112 LJKB 209, 168 LT 139, 58 TLR 369, 73 LI L Rep 165. ‘ = 1985202 Clan Matheson, The. See Clan Line Stéainers LadVvBoard of Trade; The Clan Matheson Clapham v Langton (1864) 5 B & S 729, 4 New Rep 411, 34 LJQB 46, 10 LT 875, 12 WR 1011, 2 Mar LC 54, Ex Ch Clason v Simmonds (1741) cited in 6 Term Rep 533. 2 é : 4 Perak 29 ist xxvi Table of cases PAGE Cleary v McAndrew (Cargo ex), The Galam 2 Moo PCCNS 216, 3 New Rep 254, 9 LT 550, 10 Jur NS 477, 12 WR 495, 1 Mar LC 408,PC 351 Coast Ferries Ltd v Century Insurance Co of Canada, The Brenwwood [1973] 2 Lioyd'Rep 232; on appeal (1974) 48 DLR (3d) 310. : 170 Cobb and Jenkins v Volga Insurance Co Ltd of eee (19204 Ll L Rep130, 178 L488 Cockey v Atkinson (1819) 2B & Ald 460 . : o) ELE IST Cohen v Hinckley (1809) 2 Camp 51 ; 349 Cohen, Sons & Co v National Benefit hasteanen, Co Ltd (1924) 40 TLR 347, 18 LI L Rep 199 Rae ‘ 146 Cohen (G) Sons & Co v Siandard Manian Becnesuce Ga Ltd (1925) 41 TLR 232, 69 Sol “e 310, 30 Com Cas 139, 21 LI L Rep 30 : . 48, 51, 304, 346, 368, 386, 389 Coker v Bolton [1912] 3 KB 315, 82 LJKB 91, 107 LT 54, 56 eee AOU 2a MLC 231, 17 Com Cas 313 : : VERE eRY) Colby v Hunter (1827) 3C & P 7, Mood & M 81. ; : 3 f = 4s Colledge v Harty (1851) 6 Exch 205, 20 LJ Ex 146, 16 LTOS 372 : ‘ : yen LOL, 200 Collett v Morrison (1851) 9 Hare 162,21 LJCh878 : : : : : elle é ‘ : : ~ 390;,368 Colvin v Newberry and Benson (1828) 8B& C166. : : 2 : : Comber v Anderson (1808) | Camp 523. : ; : Commercial Marine Co v Namaqua Mining Co. See Beexd Vv iShenierd.) Commercial Trading Co Inc v Hartford Fire Insurance Co [1974] 1 Lloyd’s Rep 179: » 163 SIFSo Cologan v London Assurance Co (1816) . 5M & S447. 163, 166 Commonwealth, The (1907). See Welsh Girl, The (1906) Companhia Geval de Seguros v Lloyd Continental Insurance Co Ltd (1922) 13 Ll L Rep 26 ‘ , , : : : ; F : é : : , : See) Compania Colombiana de Seguros v Pacific Steam Navigation Co [1965] 1 QB 10, [1964] 1 All ER 216, [1964] 2 WLR 484, 108 SolJo 75, [1963] 2 Lloyd’s Rep479 . Compania Maritima Astra SA v Archdale, The Armar [1954] 2 Lloyd’s Rep 95 : . 458 ¢ 2 424 Compania Maritima San Basilio SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd, The Eurysthenes [1977] QB 49, [1976] 3 All ER 243, [1976] 3 WLR 265, 120 Sol Jo 486, [1976] 2 Lloyd’s Rep 171, CA : . 91, 219, 303,477 Compania Maritima ofBarcelona v Wishart (1918) 87 LJKB 1027, 118 LT 705, 34 TLR 251, 14 Asp MLC 298, 23 Com Cas 264. 208 Compania Martiartu v Royal Exchange ASeanee [1923] 1 KB 650, 92 LJKB 546, 129 LT 1, 16 Asp MLC 189, 28 Com Cas 76, CA; affd. [1924] AC 850,HL . ; a 220nSs9 Compania Naviera Santi SA v Indemnity Marine Assurance Co Ltd, The Tropaioforos [1960] 2 Lloyd’s Rep 469 . : 241 Compania Naviera Vascongada v Bridsh end Foreign Marine fectmnee eG Ltd (1935) 54 Ll L Rep 35, 80SolJo110 . . 240, 305 Comunidad Naviera Baracaldo v N Breich Union Fire iisurance Society(1923)16 LIL Rep 49; 935190) : : Constable v Noble (1810) 2 Taunt 403 : Container Transport International Inc and : ; Reliance (ecag Eve v UGecaa: Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 e250) -)p Ll65326 Mutual . 39, 44, 45, 53, 59, 77 Continental Grain Co Inc v Twitchell ee 1 All ER 575n, 173 LT 189, 61 TLR 291, 78 LI L Rep 251, CA : : é ¢ ao eas) Conway v Gray (1809) 10 East 236): ; : : : 3 : ; 3 =, eet Copenhagen, The (1799) | Ch Rob 289. : i 343 Corcoran v Gurney (1853) 1 E & B 456, 22 LJQB 113, 20 LTOS 221, 17 Jur 1152 : abe Corlett v Gordon (1813) 3 Camp 472 3 ST Cornfoot v Royal Exchange Assurance Corpn [1904] I KB 40, 73 LJKB 22) 89 LT 490, 52 WR 49, 20 TLR 34, 48 SolJo 32, 9 Asp MLC 489, 9 Com Cas 80, CA : 122 Cory v Burr (1883) 8 App Cas 393, 52 LJQB 657, 49 LT 78, 31 WR 894, 5 Asp MLC 109, HL 164, 226 Cory v Patton (1874) LR 9 QB 577, 43 LJQB 181, 30 LT 758,23 WR 46, 2 Asp MLC 30867579 Cosmopolitan Shipping Co Inc v Hatton and Cookson Ltd (Liverpool) (1929) 143 LT 296, 18 Asp MLC 130, 35 Com Cas 113,CA . : 298 Costain-Blankevoort (UK) Dredging Co Ltd v Davenport The Nesaul Bay [1979] 1 Lioyee Rep 395 , 198, 203 Cotton v Hey! [1930] 1 Ch 510, [1930] All ER Rep 375, 99 LJ Ch 289, 143 Jon 16 : . 316 Coulouras v British General Insurance Co Ltd (1922) 12 LIL Rep220.. : ‘ . 234 Table of cases Court v Martineau (1782) 3 Doug KB 161 xxvii PAGE ‘ ; 302, oi Court Line Ltd v R, The Lavington Court [1945] 2 All ER 357, 173 ils 162, 61 TLR 418, 89 Sol Jo 497, 78 LI L Rep 390, CA ; 364 Cousins (H) & Co Ltd v D and C Carriers Ltd [1971] 2 QB 230, [1971] ] All ER es [1971] 2 WLR 85, 114 SolJo 882, [1970] 2 Lloyd’s Rep 397,CA. : 8 Coxwold, The. See Yorkshire Dale SS Co Ltd v Maniser of War Tatars The Comold Craufurd v Hunter (1798) 8 Term Rep 13 26, 111 ci Pee) Cressington, The [1891] P 152, 60 LJP 25, 64 LT 329, 7TLR 208, 7Asp MLC 27, DC : Crocker v General Insurance Co Ltd (1897) 14 TLR 112, 3 Com Cas22,CA eel Crocker v Sturge [1897] 1 QB 330, 66 LJQB 142, 75 LT 549, 45 WR 271, 13 TLR 96, 41 Sol Jo 158, 8 Asp MLC 208, 2 Com Cas 43 : : : A Crofts v Marshall (1836) 7 C & P 597 C . Crouan vy Stanier [1904] 1 KB 87, 73 LJKB 102, ‘19 TLR 664, 9 Goig Gas Puffs 52 WR 75, 47 SolJo728 . ; Crowley v Cohen (1832) 3 B & Ad 478, l LJKB 158 ; : Crozier v Smith (1840) 1 Man & G 407, | Scott NR 338, Ate 581 . Cruickshank v Janson (1810) 2 Taunt 301 : ‘ 3 J ; ; : : 142 . 449 24, 108 5 Syl eG A120) Crystal, The (1894). See Arrow Shipping Co v Tyne Rnpevene nt Comrs,The Ceca Cullen v Butler (1816) 5M&S461 . ; 3 joe 145,150 Cunard v Hyde (1859) 2E & E1, 29 LJQB 6, Gl NS 14 : 3 é . 308 Cunard SS Co v Marten [1902] 2 KB 624, 71 LJKB 968, 87 LT 400, 18 TLR 825,9 Asp MLC 342; affd. [1903] 2 KB 511, 72 LJKB 754, 89 LT 152, 52 WR 39, 19 TLR 634, 47 SolJo 708, 9 Asp MLC 452, 9 Com Cas 9, CA ‘ ; 102, 324, 444 Currie & Co v Bombay Native Insurance Co (1869) LR 3 PC 72, 6 Moo PCCNS 302, 39 LJPC 1, 22 LT 317, 18 WR 296, 3 Mar LC 369. : . 386, 388 Czarnikow (C) Ltd v Java Sea and Fire Insurance Co Ltd p94 3 AllER 256, 166 LT 104, 7OLILRep319 =. : ‘ 369 D Da Costa v Edmunds (1815) 4 Camp 142 . A - 46, 154, 326 Dakin v Oxley (1864) 15 CBNS.646, 33 LJCP 115, 10 LT 268, 10 Jur NS 655, 12 WR 557, 2 MarLC6 . : Daneau v Laurent Gendron Ltée, Union eee [1964] | Lloyd’s Rep 220 2 19 Spciety’ of Canton Ltd (Third Party) ; : , 4 F : eo Davidson v Case (1820). See Case v Bay idten (1816) Davidson v Willasey (1813) 1M&S313 . : s 2), 393: Davies v National Fire and Marine Insurance Co of New Teaana [1891] AC 485, 60 LJPC 73,65 LT 560, PC . : : whd, 92 Davis v Garrett (1830) 6 Bing 716, ‘f& Welsb 276, [ees4 All ER Rep286, 4 Moo & P 540, 8 LJOSCP 253 5 , 5 1X) De Costa v Scandret (1723) 2 P Wms 170) =. 2 : ; : é : ; -40, 55 De Cuadra v Swann (1864) 16 CBNS772 . : . : ; F : : a Wes De Hahn v Hartley (1786) 1 Term Rep 343 Delany v Stoddart (1785) 1 Term Rep 22 . : ; : : ; ; : : ; : 5 PASS) $0134 Delfin, The. See Bristol SS Corpn v London Assurance and Linas, The Delfin De Marco and Gazan v Scottish ae bs Assurance Co oe) 14 LI L Rep 173, 220 a. , De Mattos v Sanders (1872) LR i CP 570, 27 UE 120, 20 WR 801, 1 Asp MLC SUT, gol Demetriades v Northern Assurance Co, The Spathari (1923) 17 LIL Rep 327. : » 208 44; 413 246 Demetriades & Co v Northern Assurance Co (1926) 21 LI L Rep 265, HL : 4 .60, 75 De Monchy v Phoenix Insurance Co of Hartford (1928) 138 LT 703, CA; affd. sub nom. Phoenix Insurance Co of Hartford v De Monchy (1929) 141 LT 439, [1929] All ER Rep 531,45 TLR 543, 18 Asp MLC7, 35 Com Cas 67, 34 LIL Rep 201,HL_ . ; +, 194 Dennistoun v Lillie (1821) 3 Bli202,HL . : : AAV) Dent v Smith (1869) LR 4 QB 414, 10 B & S 249, 38 LJQB 144, 20 LT 868, 17 WR 646, 3 MarLC 251 . é . 144, 286 De Rothschild v BaalMail Stcam Packet Co (1852)7 Exch 734, 21 a)Ex 273, 19 LTOS PUR) Ss eae LOO xxviill Table of cases PAGE Devaux v J’Anson (1839) 5 Bing NC 519, 2 Arn 82, 7 Scott 507, 8 LJCP 284, 6 LT 836, 3 Jur > O73 De Vaux v Salvador (1836) 4 ‘Ad & El 420, 1 Har & W 7a, 6 Nev & MKB 713, 5 LJKB S54 hae: ; . | 144,422 De Wolf v Archangel surance Co (1874), LR 9 QB 451, 43 LJQB 147, 30 ET 605, 22 WR 801, 2 Asp MLC 273 F ‘ 26 Diamond, The [1906] P 282, 75 LJP 90, 95 LT 550, 10 nS MLC 286 : ; é = Pi Dias, The. See Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd, The Dias Dickenson v Jardine (1868) LR 3 CP 639, 37 LJCP 321, 18 LT 717, 16 WR 1169, 3 Mar LC 12 Gres ; 153, 182, 183 Dickson & Co v Devitt (1916) 86 LJKB 315, 32 TLR 547, 21 Com on 291 : Seer Diederichsen v Farquharson Bros [1898] | QB 150, 67 LJQB 103, 77 LT 543,46 WR 162, 14 TLR 59, 42 SolJo 65, 8 Asp MLC 333, 3 Com Cas 87, CA : : « 154 Dixon v Reid (1822) 5 B & Ald 597, 1 Dow & Ry KB 207. ; 2 FPASORIGS Dixon v Sadler (1839) 5M & W 405, 9 LJ Ex 48; affd. sub nom. Sadler VvDion (1841) 8M & W 895, 11 LJ Ex 435, Ex Ch . 23302 Dixon v Whitworth (1880) 4 CPD 371, 48 LJCP 538, 40 LT 718, 28 WR 184, 4 Asp MLC 326; revsd. 49 LJQB 408, 43 LT 365, 4 Asp MLC 327, CA ; : 225, 443, 447 Dobell (G E) & Co v SS Rossmore Co Ltd [1895] 2 QB 408, [1895-9] All ER Rep 885, 64 LJQB 777, 73 LT 74, 44 WR 37, 11 TLR 501, 8 Asp MLC 33, 14 R 558, CA 3 5 a Hl Dobson v Bolter (1799) 1 Marshall on Marine Insces 3rd ed 231, 1 Park’s Marine Insce 8th ed 239 ‘ 411 Dodwell & Co Ltd v Batch Dominions Geabral psec Co Ltd [1955] 2 Lloyd’ Rep 391n = : at 204 i o 238 Dora Forster, The [1900] P 241, 69 LJP 85, 49 WR 271, 16 TLR 380 F Doriga Y Sanudo v Royal Exchange Assurance le he 13 LILpeel 126, 166 ; . . 5 440 PRE Doyle v Dallas (1831) 1 Mood & R 48 Driscol v Bovil (1798) 1 Bos & P 313 Driscol v Passmore (1798) 1 Bos & P 200 . : 348,413 vine) 72 Domingo Mambra Seciee eon VvBae (1924) 20 Ll i Rep 22 189 ; ‘ . ‘ F ; 6 : : : : ‘ Dudgeon v Pembroke (1874) LR 9 QB 581, 43 LJQB 220, 31 LT 31, 22 WR 914, 2 free MLC 323; on appeal (1875) 1 QBD 96, Ex Ch; on appeal (1877) 2 App Cas 284, 46 LJQB 409, 36 LT 382, 25 WR 499, 3 Asp MLC 393, HL : ; Duff vMackenzie (1857) 3 CBNS 16, 26 LJCP 313, 30 LTOS 103, 3JurN NS 1025 141, 302, 323 x eelO7 431 Duffell v Wilson (1808) 1 Camp 401 ; Dunbeth, The [1897] P 133, 66 LJP 66, 76 a 658, 8 Asp MLC 284 ; snp 84 = 1h30 Dunlop Bros & Co v Townend [1919] 2 KB 127, [1918-19] All ER Rep 575, 88 LJKB 1129, 121 LT 159, 14 Asp MLC 517, 24 Com Cas 201 ; Duthie v Hilton (1868) LR 4 CP 138, 38 LJCP 93, 19 LT 285, 17 WR 4): 3 Mar EG@H66] PA Ne. 2 esol E Eagle Oil Transport Co Ltd v Board of Trade (1925) 42 TLR 201 . 200 Eagle, Star and British Dominions Insurance Co Ltd v Reiner ae 43 TLR 259, 71 Sol Fo 176, 27 LIL Rep 173 : ; ‘ SLT Earle v Harris (1780) 1 Doug KB 357 : : ‘ ‘ : ‘ a 260 Earle v Rowcroft (1806) 8 East 126 . : , ; 162, 164, 165, 166, 169 Eastern Prince, The. See Link v General fciranee Co a Aycan: The Eastern Prince Ebsworth v Alliance Marine Insurance Co (1873) LR 8 CP 596, 42 LJCP 305, 29 LT 479, 2 Asp MLC 125; revsd. (1874) 43 LJCP 394n, Ex Ch : . 24, 25 Eddystone Marine Insurance Co, Re, ex p Western Insurance Co [1899] 2 Ch 493, 61 LJ Ch 362, 66 LT 370, 40 WR 441, 8 TLR 393, 36 ae 308, 7Lgicy MLC107_ d . 466 Eden v Parkison (1781) 2 Doug KB 732. : : . 286 Edie v East India Co (1761) 1 Wm BI 295, 2 Burr 1216 : 2 : ; : 2 526 Edwards v Footner (1808) 1 Camp530 ay BETS Edwards (John) & Co v Motor Union Insurance ca Ltd [1929] 2 KB 249, 91 LJKB 921, 128 LT 276, 38 TLR 690, 16 Asp MLC 89, 27 Com Cas 367,11 LIL Rep 122,170 . 455,456 Eenrom, The (1799) 2 Ch Rob 1, 1 Eng Pr Cas 118; affd. (1802) 6Ch Robix . : =e 309 Table of cases Eftychia, The. See Bank of Athens v Royal Exchange Assurance, The J Elkin v Janson (1845) 13 M & W 655, 14 LJ Ex 201, ane: 353 ; Elliot v Wilson (1776) 4 Bro Parl Cas470,HL . xxix PAGE hak. : 2 ‘ ; <5 18 4 5 = 129 Elton v Brogden (1747) 2 Stra 1264. : \ : ; : >» Elton v Larkins (1832) 8 Bing 198, 5 C & P 385, 1Moo & S 393 : : : : Seg Emanuel & Co v Andrew Weir & Co (1914) 30 TLR 518. 2 Emperor Goldmining Co Ltd v Switzerland General Insurance Co Ltd [1964] LLloyd'sRep GUC) e 66 eel 274 5 a0) Empire SSC cnr orated Vv Thredaneedle Teaanee Co (1925) 22 Ll L Rep 437, 534 3 Empresa Lineas Maritimas Argentinas v Ocean Mutual Underwriting Association (Bermuda) Ltd [1984] 2 Lloyd’sRep 517. : Empress Assurance Corpn Ltd v C T Bowring & Co Ltd (1905) 11 Corn Cas 107 Engineer, The. See Tatham, Bromage & Co, The Engineer Entwistle v Ellis (1857) 2H & N 549, 27 LJ Ex 105, 3 LT 382,6 WR 76 . OTS 5 5 G78) ‘ a 8) ; 431 Etherington and Lancashire and Yorkshire Accident Insurance Co, Re [1909] 1 KB 591, [1908-10] All ER Rep 581, 78 LJKB 684, 100 LT 568, 25 TLR 287, 53 SolJo 266, CA 328 Eurysthenes, The. See Compania Maritima San Basilio SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd, The Eurysthenes Euterpe SS Co Ltd v North of England Protecting and see Association Ltd (1917) 33 MIUReoL0— =, e201 349) Evelpidis Era, The. See First National Bonk a Cues Vv“West: of Enelahd Shipowners Mutual Protection and Indemnity Association (Luxembourg), The Evelpidis Era Everth v Hannam (1815) 6 Taunt 375, 2 Marsh 72 5 é s : : : Eyre v Glover (1812) 16 East 218,3 Camp 276 . : : 3 , : ; mel 69 ae le Fabrique de Produits Chimiques SA, La v Large [1923] 1 KB 203, [1922] All ER Rep 372, 92 LJKB 370, 128 LT 636, 39 TLR 76, 16 ee MLC 110, 28 Com Cas 248, 13 LI L Rep 209% =. ; 243 Fairfield Shipbuilding 28 Bheiecrie Co Ltd v Gandnes Mountain & Co Ltd (1911) 104 LT 288, 27 TLR 281, 11 Asp MLC 594 : Fairlie v Christie (1817) 7 Taunt 416, 1 Moore CP 1 14 Falkner v Ritchie (1814) 2M & S 290 5 : : Farmer v Legg (1797) 7 Term Rep 186. : : ‘ : é : 5 aes j : , ; . : : j : 5 no. 5 . othe} L68 308 Farnworth v Hyde (1865) LR 2 CP 204, 36 LJCP 33, 15 LT 395, 12Jur NS 997, 15 WR 340, 2 Mar LC 429,ExCh ; > 348,374 Federation Insurance Co of Canada vGore Neeceeure Inc and nes (Gein as S A Hirsh : P A 5 : ; . Feise v Parkinson (1812) 4 Taunt 640 ; : Fenwick v Robinson (1828) 3 C & P 323, Dan & Ll Bes & Co) [1968] 2 Lloyd’s Rep 109 : : 2 5 ‘ 5 : . 73, 84 2 1419 248 Field SS Co v Burr [1899] | QB 579, 68 LJOB 426, 80 LT 445, 47 WR 341, 15 TLR 193, 43 SolJo 258, 8 Asp MLC 529, 4 Com Cas 106,CA_ . : : ; : eee Fillis v Brutton (1782) 1 Park’s Marine Insurances (8th Edn) 414. : : : SO The: Firemen’s Fund Insurance Co v Western Australian Insurance Co Ltd and Atlantic Insurance Co Ltd (1927) 138 LT 108, [1927] All ER Rep 243, 43 TLR 680, 17 Asp MLC 332, 33 Com Cas 36, 28 LIL Rep 243. é : 465, 466, 468 First National Bank of Chicago v West of England Se yer Mutual Protection and Indemnity Association (Luxembourg), The Evelpidis Era [1981] 1 Lloyd’s Rep 54 os 477 Fisher v Cochran 5 Tyr 496, 4 LJ Ex 328, Ex Ch . 284 Fisher v Smith (1878) 4 App Cas 1, 48 LJOQB 411, 39 LT 430, 27 WR 113, 4 Asp MLC 60, HL. : : . ., 334,336 Bick y Maserman (1841) 8M&W 165, 10 LJ Ex 306, 7 LT 442 3 , : ; 85, 461 Fitzgerald v Pole 4 Bro Parl Cas 439, HL 3 5 . dae Fitzherbert v Mather (1785) 1 Term Rep 12 : : ; : Fleming v Smith (1848) 1 HL Cas 513, HL ; ‘ : : Fletcher v Inglis (1819) 2 B & Ald 315 : Flint v Flemyng (1830) | B & Ad 45, L & Welsb 257, 8 LJOSKB 350 . : : : : : 3 : 5 : 4l, 44, 55, 71 . 383,388 ; +. 142 é ol 22 Foley v Moline (1814) 5 Taunt 430, 1 Marsh 117 : : : c : 5 Lil xxx Table of cases PAGE eS v Tabor (1861) 2F & F663. Foley Foley v United Fire and Marine Insurance Co of syduey (1870 LR o cP 155, 39 LJCP 206, . 21,115, 118 : 22 LT 108, 18 WR 437, 3 Mar LC 352,ExCh mee287 Fomin v Oswell (1813) 3 Camp 357 . 435, 30 Com Cas OF M Fooks v Smith [1924] 2 KB 508, 94 cee 23, 132 eat 486, 16 AspMLC oO) : ; 19 LIL Rep 297, 414 9, 85, 95, 98 ; : Forbes v Aspinall (1811) 13 East 323 Forestal Land, Timber and Rlys Co Ltd v Rickards [1940] 4 All ER 96; revsd. [1941] KB 225, [1940] 4 All ER 395, 57 TLR 139, 68 LI L Rep 45, CA; affd. sub nom. Rickards v Forestal Land, Timber and Rlys Co Ltd [1942] AC 50, [1941] 3 All ER 62, 110 LJKB Dp 27 tS4.1 56; 593, 165 LT 257, 57 TLR 672, 46 Com Cas 335, 70 LI L Rep 173, HL 163, 167, 265, 329, 362, 364, 367, 370, 376 . g : ‘ Forster v Christie (1809) 11 East 205 Fort v Lee (1811) 3 Taunt 381 3 Foster v Reeve. See Koster v Reed : : ; ‘ ; : Forrester v Pigou (1813) 1M&S9 ike) se F : : : : : , : ; : a2 30) 2, Om Foster v Wilmer (1746) 2 Stra 1249 . Fowler v English and Scottish Marine Insurance Co Ltd (1865) 18 CBNS 818, 6 New Rep 66, 130 34 LJCP 253, 12 LT 381, 11 Jur NS 411, 13 WR 658, 2 Mar LC 202 310 Fracis, Times & Co v Sea Insurance Co Ltd (1898) 79 LT 28, 47 WR 119, 42 Sol Je 634, 8 Asp MLC 418, 3 Com Cas 229 . : 308 Francis v Boulton (1895) 65 LJQB 153, 73 LT 578, 44 WR 222, 12 THR 75, 40 Soloo 145, 8 Asp MLC 79, 1 Com Cas 217. 5 Franco v Natusch (1836) Tyr & Gr401_. 3 Frangos v Sun Insurance Office Ltd (1934) 49 LI L Rep 304 : : : |. : : Freeland v Glover (1806) 7 East 457, 6 Esp 14, 3 Smith KB 424 : é Friere v Woodhouse (1817) Holt NP 572. Fuerst Day Lawson Ltd v Orion Insurance Co Ltd [1980] 1 Rlovets Rep 656 : a : 3a 920298 : . 304, 306 : ; : ‘ ‘ . 44,92 ah BOT, 9,905,180 Furness Withy & Co Ltd v Duder [1936] 2 KB 461, [1936] 2 All ER 119, 105 HERS473, 154 LT 663, 80 SolJo 488, 18 Asp MLC 623, 55 LI L Rep 52 . 174 G Gabay v Lloyd (1825) 3 B & C 793, [1824-34] All ER Rep 422, 5 Dow & Ry KB 641, 3 LJOSKB 116 : 142,326 Gagniere & Co Ltd v Raster Co x Warehomes Insdranee and Tveasnent oe Goods with Advances Ltd (1921) 8 LIL Rep 365,CA : ; : : , : ne Gairdner v Senhouse (1810) 3 Taunt 16. 3 131, 328 Gambles v Ocean Marine Insurance Co of Bombay, (1876) 1 Ex D 141, 45 LJQB 366, 34 LT 189, 24 WR384, 3 Asp MLC 120, CA 5 Gandy v Adelaide Insurance Co (1871) LR 6 = 746, 40 0 LJQB239, 25 LE 742, 1 AspMLC 188. 5 awe Garrels v Kensington (1 799) 8 Term Rep 230 : : 121 5S 288 Garthwaite (Sir William) (Insurance) Ltd v Port of Manchester enn LIL Rep 194,CA . ; Co Ltd (1930) 37 397 Gedge v Royal Exchange Assurance Corph [1900] 2 QB 214, [1900- 3] All ER Rep 179, 69 LJQB 506, 82 LT 463, 16 TLR 344, 9 Asp MLC 57, 5 Com Cas 229 . ; . 13, 309, 314 Gee and Garnham Ltd v Whittall [1955] 2 Lloyd’s Rep 562 . : ; se Geelong, The. See Peninsular and Oriental Branch Service v Gommonwealth Shipping Representative, The Geelong General Insurance Co Ltd of Trieste v Royal Exchange Assurance Corpn 2 Com Cas 144, 202 43] General Inecrance Co of Trieste Passictraainnt Generali VvGary [1897] 1QB 335, 66 LJQB 313, 13 TLR 130, 2 Com Cas 58 : 289 General Shipping and eh heCo v British General iasuremce Co Ltd (1923) 15 Ll i Rep 175 : : 95, 289 General Siem Naviesden ConvR (1927) 27 Ll i Rep 366 3 5 BHD General Steam Navigation Co Ltd v Commercial Union Neonates Co Ltd (915)31 TLR O50 sar General Steam Nevieston Co Ltd verso (1915) 31 TLR 630 i “ 3 : : : . 349 207 Table of cases xxxi PAGE Gernon v Royal Exchange Assurance (1815) 6 Taunt 383, Holt NP 53n, 2 Marsh 88 . isin 388 Geyer v Aguilar (1798) 7 Term Rep 681. : 5 é é ¢ : e RT Gibson v Mair (1813) 1 Marsh 39°. : : Gibson v Small (1853). See Small v Gibson (1849) (1850) F ‘ ; F ; : . 288 ; ; OO 5 : 41,55 Gibson v Winter (1833) 5 B & Ad 96, 2 Nev & MKB 737, 2 ree 1305 Gladstonev King (1813) 1M & S$35 j ; : Glaser v Cowie (1813) 1M&S52_. ae Glasgow Assurance Corpn Ltd v William Syrnendean & Co (191 1) 104 LT oa, 27 TLR 245. 11 Asp MLC 583, 16 Com Cas 109. : : 0) 99, 70 Gledstanes v Royal Exchange Assurance (1864) 5B & S 797, 5 New Rep 40, 34 LJOB 30, 11 LT 305, 11 Jur NS 108, 13 WR 71, 2 MarLC 142 » : : Oo Sk Glen Line Ltd v A-G (1930). See A-G v Glen Line Ltd and veer and Tendon War Risks Insurance Association Ltd (1929) Glenlivet, The [1894] P 48, 63 LJP 45, 69 LT 706, 42 WR 97, 10 TLR 97, 38 sae 78, 7 Asp MLC 395, CA ; ‘ ; 2 1024S Glennie v London Assurance Co (1814) 2 M &S 371 : Glover v Black (1763) 3 Burr 1394, 1 Wm BI 422 9 ; 3 : : : ao é 27, 108 SEO) Glynn v Margetson & Co [1893] AC 351, 62 LJQB 466, 69 LT l, 9 TLR 437, 1 AN MLC S06; VRAO37 I. ; dle Godin v London Assurance Co a 758) I Buri 489, 2 Keay 254, 1 Wm Bl 103 : . Gold Sky, The. See Astrovlanis Compania Naviera SA v Linard, The Gold Sky [1972] 2 Lloyd’s Rep 187 461 Gold Sky, The. See Astrovlanis Compania Naviera SA v Linard, The Gold ee Goldschmidt v Whitmore (1811) 3 Taunt 508. Gooding v White (1913) 29 TLR 312 ; : : ; . 164 sores 7. Goole and Hull Steam Towing Co Ltd v Ocean Marine Tneurance Co Ltd [1928] 1 KB 589, [1929] All ER Rep 621, 97 LJKB 175, 138 LT 548, 44 TLR 133, 72oe 17, 17 Asp MLC 409, 33 Com Cas 110, 29 LI L Rep 242 ; . 9,6, 7,422, 460 Goram v Sweeting (1670) 2 Saund 200 : : ; ; ; 5 Gordon v Rimmington (1807) | Camp 123 : ; : Gorsedd SS Co Ltd v Forbes (1900) 16 TLR 566, 5 Con Cas 41 Sim fb. é Goulart v Trans-Atlantic Marine Inc and Enos [1970] 2 Lloyd’s Rep 389 : : ; : Gould v Oliver (1837) 4 Bing NC 134, 3 Hodg 307, 5 Scott 445, 7 LJCP 68 Graham v Barras (1834) 5B & Ad 1011, 3 Nev & MKB125 . : ‘ ‘ : ~ a po we {iit NY toes) 216 . 46, 154, 326 ‘ e2o3 Graham Joint Stock Shipping Co v Motor Union Insurance Co [1929] 1 KB 563, [1921] All ER Rep 394, 91 LJKB 370, 126 LT 620, 15 Asp MLC 445, 27 Com Cas 130, CA . . Graham Joint Stock Shipping Co Ltd v Merchants Marine Insurance Co Ltd [1924] AC 294, 93 LJKB 122, 130 LT 706, 40 TLR 192, 68 Sol Jo 273, 16 Asp MLC 300, 29 Com Cas 107, 17 LI L Rep 44, 241,HL . Grainger v Martin (1863) 400 318 4B & S9, 2 New Rep 191, at nom. Martin v Gineer 8 ir 796, 11 WR 758, 1 Mar LC 365,ExCh F Grand Union (Shipping) Ltd v London SS See Mutual ioeraee Iso Bosworth (No 3) (1962) 106 SolJo 689, [1962] 1 Lloyd’s Rep 483. Grant v Paxton (1809) 1 Taunt 463 . : . 373,388 Ltd, The ‘ ‘ 2 ol94 . 46 Grant, Smith & Co and McDonnell Ltd v Seattle: Conanaton and Dey Dock Co [1920] AC gM) é LT 203, PC 162, [1918-19] All ER Rep 378, 89 LJPC 17, 122 93345 oe : Gratitudine, The (1801) 3 Ch Rob 240, [1775-1802] All ER Rep 283. 5 Ply ; 3 : ; Grauds v Dearsley (1935) 79 SolJo 271, 51 LI L Rep 203 Gravesend Barge Case (1608). See Mouse’s Case Gray v Lloyd (1812) 4 Taunt 136. 308 Grazebrook, Re, ex p Chavasse (1865) 4 De GJ & Sai 6m 6 New Rep 6, 34 LJ Bey We ‘12 LT 309 249, 11 Jur NS 400, 13 WR 627,2MarLC197_ Great Indian Peninsula Rly Co v Saunders (1862) 2B &S 266,31 1JQp206, 6 UT 297,9 Jur 444,447 . : NS 198, 10 WR 520, 1 Mar LC 211, ExCh . Great Indian Peninsula Rly Co v Turnbull 53 LT 325, 33 WR 874, l TLR 570, 5 Asp MLC 21 465. Green v British india Sieae Navigation G& Ltd [1921] 1 AC. 99% 89 LJKB 881, 123 LT 721, e204 : 36 TLR 791, 64 SolJo 737, 15 Asp MLC 58, 25 Com Cas 301, HL. . 349 4 . ; : ; : : Green v Brown (1743) 2Stra1199 . xxxli Table of cases Green v Elmslie (1794) Peake 278. : Green v Royal Exchange Assurance Co'(1815) 6 Taunt 68, l Marsh 447 Green Lion, The. See Sipowicz v Wimble, The Green Lion : . 2 ; PAGE 3 e226 OOS OOO Greenhill v Federal Insurance Co [1927] 1 KB 65, 95 LJKB 717, 135 LT 244, 70 SolJo 565, 17 Asp MLC 62, 31 Com Cas 289, 24 LI L Rep 383, CA . : : : 50, 51, 52, 58 Greenock SS Co v Maritime Insurance Co [1903] 1 KB 367, 72 LJKB 59, 88 LT 207, 51 WR 447, 19 TLR 107, 8 Com Cas 78; affd. [1903] 2 KB 657, 72 LJKB 868, 89 LT 200, 52 WR 186, 19 TLR 680, 47 SolJo 761, 9 Asp,MLC 463, 9 Com Cas41,CA . . 81, 226, 301 Greer v Poole (1880) 5 QBD 272, 49 ae 463, 42 LT 687, 28 WR 582, 4 oF MLC 300, DC : yei220 Gregory v Christie (1784) 3 Doug KB 419 : : «1 Gregory Maritime Ltd v Thos R Miller & Son, United Kingdon Mutual SS Assurance 120 Association Ltd and United Kingdom Freight, Demurrage and Defence Association Ltd [1966] 1 Lloyd’s Rep 296 ; 3 ; ; ; ‘ ; : 5; ay Cel Gregson v Gilbert (1783) 3 Doug KB 232 . : o L424 5 Griffiths v Bramley-Moore (1878) 4 QBD 70, 48 LJQB 201, 40 LT 149, 97 WR 480, 4 Asp MLC 66, CA j 19 Grill v General Iron Screw Collier Co (1866) LR 1 cP 600, har & Ruth 654, 35 LJCP 321, 14 LT 711, 12 Jur NS 727, 14 WR 893, 2 Mar LC 362; affd. (1868) LR 3 CP 476, 37 LJCP 205, 18 LT 485, 16 WR 796, 3 Mar LC 77, Ex Ch : 164 Gulf and Southern SS Co Inc v British Traders Insurance Co Ltd [1930] 1 KB Sh [1929] All ER Rep 601, 99 LJKB 208, 142 LT 406, 35 Com Cas 198, 18 Asp MLC 94, 35 LI L Rep 203 ae e 5 Gulfstream Cargo Ltd VvRelence Jnsarance Co, The Papoose [1971] 1 Blovdis Rep 178: Gurney v Grimmer (1923) 38 Com Cas 7, 44 LI L Rep 189, CA : : Guthrie v North China Insurance Co Ltd (1902) 18 TLR 412, 7 Com Cas 130, CA ; aay 53, 58 Sell AOD H Hadkinson v Robinson (1803) 3 Bos & P 388 Hagedorn v Whitmore (1816) 1 Stark 157 : : : : 3 ‘ : : ; ; 227, 230 “144 Hahn v Corbett (1824) 2 Bing 205, 9 Moore CP 390, 3 LJOSCP 253 : : te 1446931 Hai Hsuan, The. See China (Republic of), China Merchants Steam Navigation Co and United States of America v National Union Fire Insurance Co of Pittsburgh, Pennsylvania, The Hai Hsuan Hai Hsuan (No 2), The. See Repulic of China Merchants Steam Navigation Co Ltd and United States of America v National Union Fire Insurance Co of Pittsburgh, Pennsylvania, The Hai Hsuan (No 2) Halhead v Young (1856) 6 E & B 312, 25 LJQB 290, 2 Jur NS 970, 4 WR 530, sub nom. Hallhead v Young 27 LTOS 100 : : 26, 108 Hall v Hayman [1912] 2 KB5, 81 LJKB 509, 106 LT 142,28 TLR 171,56SolJo205, 12 Asp MLC 158, 17 Com Cas 81 : ‘ WON Shen ont Hall v Janson (1855) 4 E & B 500, 24 LJOB ON 24 LTOS 289, ju NS 571, 3 WR 213, 3 CLR 737 ‘ a 107,326 Hall Bros SS Co Ltd v Youre, The Trident [1939] ] KB 748, [1939] 1 All ER 809, 108 LJKB 313, 160 LT 402, 55 TLR 506, 83 SolJo 175, 19 insMLC 269, 44 Com Cas 146, 63 LI L Rep 143, CA : , ‘ : ; = lis Hallhead v Young. See Hathead VvVoure Hamilton v Mendes (1761) 2 Burr 1198, 1 Wm Bl 276. : Hamilton v Sheddon (1837) 3 M & W 49, Murp & H 334, 7 LJ Ex i 6 LT 479 : oro 7 136,270 Hamilton & Co v Eagle Star and British Dominions Insurance Co Ltd (1924) 19 LI L Rep ae é 74 Hamilton, Fraser & Co v ePantort b Co (1887) 12‘App:Cas 518, 571B 24, 57 LT 726, 52 JP 196, 36 WR 369, 3 TLR 768, 6 Asp MLC 212,HL. ; . 141, 142, 145, 150 Hammond v Reid (1820)4B& Ald72 : : 5 ules Harding v Bussell [1905] 2 KB 83, 74 LJKB 500, 92 LT 531, ‘21 TLR 401, 10 AspMLC 50, 10 Com Cas 184, CA Hare v Travis (1827) : : 7B & C 14,9 Day & Ry KB 748,S LJOSKB 348 : : : . 398 cris) BR Table of cases xxxiii PAGE Harland and Wolff Ltd v J Burstall & Co pies 84 LT 324, 17 TLR 338, ee 9 MLC 184, 6 Com Cas 113 : ; : ; tm Harman v Vaux (1813) 3 Camp 429° : 126 eal Harmonides, The [1903] P 1, 72 LJP 9, 87 LT 448, 51 WR 303, 19 TLR Sie ‘9 Ags MLC 3545 lag : 3 ‘ : ee Harocopus v Neen (1934) 49 Ll L Rep 26s : 00 Harper (A C) & Co v Mackechnie & Co [1925] 2 KB 423, 95 LJKB 162, 134 OF 90, 31 Com Cas 21 c ; Harrison v Universal Marine lesen Co (1862) 3F & F 190 ; : . 60 5a Nl Harrisons Ltd v Shipping Controller [1921] 1 KB 122, 90 LJKB 384, 124 LT 540, 36 TLR 880,15 AspMLC 270. 201 Harrower v Hutchinson (1869) LR 4 QB 523, 17 WR Wale reveds ‘LR 5 QB 584, 10 B& S 469, 39 LJOB 229, 22 LT 684, 3 Mar LC 44, Ex Ch : : 56, 116 Hart v Standard Marine Insurance Co Ltd (1889) 22 QBD 499, 58 Lyn:284, 60 LT 649, 37 WR 366, 5 TLR 229, 6 Asp MLC 368, CA Hartley v Buggin (1781) 3 Doug KB39 . : . 281 136 Haughton v Empire Marine Insurance Co (1866) LR 1 Exch 206, 35 LJ Ex 175 15 LT 80, 14 WR 645, 2 Mar LC 406, sub nom. eta Vv epee Marine Insurance Co 4 H & C 44,12 Jur NS376 . : : : eplilo Havelock v Hancill (1789) 3 Tom Rep 277 ‘ 164 Haversham Grange, The [1905] P 307, 74 LJP 115, 93 LY 733, 53 WR 675, 21 TLR 628, 10 Asp MLC 156, CA . : . 416,421 Haywood v Rodgers (1804) 4 East 590, nb nom. Heyward VvRodeers 1 Smith KB 289 Hearne v Edmunds (1819) 1 Brod & Bing 388, 4 Moore CP 15 . j Hedburg v Pearson (1816) 7 Taunt 154, 12 Marsh 432 aco -2 412 . 431 Hedley v Pinkey & Sons SS Co [1894] AC 222, 63 LJQB 419, 70 LT 630, 42 WR 497, 10 TLR 347, 7 Asp MLC 483,6R106,HL 297 Helen, The (1865) LR 1 A & E 1, 35 LJ Adm 2, 13 we 305, ne NS 1025, 14 WR 136, 2 Mar LC 293. : 309 Helmville Ltd v Yorkshire Ipeucanec Co Ltd, The Medina Pee [1965] 1 Loves Rep BOW te : 5 . 97,341, 374, 422, 423, 424 Henchman v Offley (1 782) 3 Doug KB 135, 2 Hy,Bl 345n ; ; 93, 461 Henderson Bros v Shankland & Co [1896] | QB 525, 65 LJOB 340, 74 LT 238, “44 WR 401, 12 TLR 250, 40 SolJo 334, 8 Asp MLC 136, 1 Com Cas 333,CA : ao Henkle v Royal Exchange Assce Co (1749) 1 Ves Sen 317, [1558-71] All ER ep 450 Bees Henriksens Rederi A/S v T H Z Rolimpex, The Brede [1974] QB 233, Bae3 All ER 589, [1973] 3 WLR 556, 117 SolJo 600, [1973] 2 gage s oe 333,CA . serel9 Herring v Janson (1895) 1ComCas177_ . Heselton v Allnutt (1813) 1M & S 46 ; Hewitt v London General Insurance Co Ltd (1925) 23 u L Ra 243 : : : : : Be -98 ‘ : . 130 . 80, 117, 135, 467 Hewitt Bros v Wilson [1915] 2 KB 739, 84 LJKB 1337, 113 LT 304, 31 TLR 333, 13 Asp MLC 111, 20 Com Cas 241, CA : 09 Heyman v Parish (1809) 2 Camp 149, 11 RR 688 F : : 5 ; ; . 167 Heyward v Rodgers. See Haywood v Rodgers Hibbert v Carter (1787) 1 Term Rep 745, [1775- no All ERRe, DP ; : 25, 320 Hibbert v Martin (1808) 1 Camp 538 : ; ; ; : - 169 Hibbert v Pigou (1783) 3 Doug KB 224. 203) Hickie and Borman v Rodocanachi (1859) 4 H & N 455, 28 LJ Ex 273, 33 LTOS 150,5 Jur NS 550, 7 WR 545 395 Hicks v Shield (1857) 7E & B 633, 26 LJQB 205, 29 LTOS 106, ane NS 715,5 ‘WR 536 ol Hide v Bruce (1783) 3 Doug KB 213 3 : elo Hill v Patten (1807) 8 East 373, [1803-13] All ER Rep 479, Holt NP 333n ; z . 108 Hill v Scott [1895] 2 QB 713, 65 LJQB 87, 73 LT 458, 12 TLR 58, 8 Asp MLC 109, 1 Com Cas 200,CA. : eet Hills v London iiaance Cone (1839) 5 M & W 569, 9 LJ Ex 25, 1 LT 159'e: : . 431 Hindustan Steam Shipping Co v Admiralty Comrseee 8 LIL Rep 230 . c a TY) Hobbs v Hannam (1811) 3 Camp 93 : : : . 17, 20, 163 Hodgson v Glover (1805) 6 East 316 ; ; ; 3 c , ‘ : 4s) Hodgson v Malcolm (1806) 2 Bos & PNR 336. t 3 : . 145 Hoffman & Co v British General Insurance Co (1922) 10 LI LiRep 434 ; ; P . 299 xxxiv Table of cases Holland v Russell (1863) 4B & S 14, 2 New Rep 188, 32 LJQB 297, 8 LT 468, 11 WR 757, Ex Ch . ; PAGE be Hollingworth v Brodrick (1837) 7 Ad & El 40, 8 LJQB 80, Lye 430, sub nom. iproderickesVv Hollingsworth 2 Nev & PKB 608, Will Woll & Dav 689 : Holman v Johnson (1775) 1 Cowp 341, [1775-1802] All ER Rep 98 302 309 : Holt Hill Sailing Ship Co v United Kingdom Marine Association [1919] 2 KB 789, 88 LJKB 1155, 121 LT 420, 35 TLR 367, 14 Asp MLC 463 4 Honour v Equitable Life Assurance Society of US [1900] 1 Ch 852, 69 LJ Ch 420, 82 ig 144, 48 WR 347, 44 SolJo 313 3 375 273 Hood v West End Motor Car Packing Co [1917] 2 KB 38, 86 LJKB 831, 116 LT 365, ‘61 Sol Jo 252,14 Asp MLC12,CA 110 Hoop, The (1799) 1 Ch Rob 196, [1775— 1802] AllER Rep 129, 1 Ege Pr Gas 107 Hopper v Wear Marine Insurance Co (1882) 46 LT 107, 4 eos MLC 482 3 : : 309 tg Hore v Whitmore (1778) 2 Cowp 784 : Hornal v Neuberger Products Ltd peels l S 247, (1956)3 All ER 970, [1956] 38 WLR 1034, 100 SolJo915, CA . . 280 247 Horncastle v Suart (1806) 7 East 400 : : F : ; : veel Horneyer v Lushington (1812) 15 East 46, 3 Came Solr 5 : Weer 115, 121, 287 Houghton v Empire Marine Insurance Co. See Haughton v Empire Marne Insurance Co Houstman v Thornton (1816) Holt NP 242 ; 3 ew S924 57 Howard, Houlder and Partners v Union Marine fisteance Co Ltd (1922) 38 TLR 515, 10 LI L Rep 627, HL : : : : Hubbard v Glover (1812) 3 Camp 313 : Hudson v Bilton (1856) 6 E & B 565, 26 LJOB 27, 27 LTOS 154, 2 fur NS 784 . ; : : - 409 IRLERE 283 Hudson v British and Foreign Marine Insurance Co. See Leitrim, The Hudson v Harrison (1821) 3 Brod & a 97, 6 Moore CP 288 , é ; ny) BS889090 Hull v Cooper (1811) 14 East 479. : : ‘ 3 & 4 ’ : : ; Bo 29827 all otek) Humtffrey v Dale (1857) 7 E & B 266 ; Hunt v Royal Exchange Assurance (1816) 5 M & S 47 : : 126 Hunter v Northern Marine Insurance Co Ltd (1888) 13 App Cas 717, HL : b 1229326 Hunter v Potts (1815) 4 Camp 203. ae ay Hunter v Wright (1830) 10 B & C714, L & Welsb 138, 5 Maa &Ape KB 611, 8 LJOSKB 250 me r. SpG283 Hunter, The (1815) l Bods 480, 2 ie Pr Gs 208 5 25 Hutton v Warren (1836) 1 M & W 466, [1835-42] All ER Rep 151, 2 Gale 71, iv & Gr 646,5 LJ Ex 234. 287 325 Hydarnes SS Co v Indemnity Mutual Marine eeuraice Co [1895] 1 OB 500, 64 LJQB 353, 72 LT 103, 11 TLR 173, 7 Asp MLC 553, 14 R 216, CA E : 102, 119, 324 Hyderabad (Deccan) Co Bitte v eat 2 mt 530, 68 hk 862, 15 TLR 449, 4 Com Cas 270 : : . 8,136, 178 I Imperial Marine Insurance Co v Fire Insurance Corpn Ltd (1879) 4 CPD 166, 48 LJQB 424, 27 WR 680, sub nom. Maritime Marine Insurance Co Ltd v Fire Re-insurance Corpn Ltd 40 LT 166,4 Asp MLC 71 . 92 Imrie v Castrique (1860) 8 CBNS 405, Ex Ch; affd. sab nom. Cosrenie Vv‘Ante. (1870) LR 4 HL 414, [1861-73] All ER Rep 508, 39 LJCP 350, 23 LT 48, 19 WR 1, 3 Mar LC 454, igh ey 25 Indian City, The. See Rewtdon ‘Smith Tne: Ltd v Black Sea dna Baltic General Tounaniee cS Ltd, The Indian City .~ Inglis v Stock (1885) 10 App Cas 263, 54 LJQB 582, 52 LT 821, 33 WR 877, 5 Asp MLC 422, HL ; 26, 108 Inman SS Co VvBischoff (1882) 7 App Cas 670, [1881—5] All ER Rep 440, 52 LJQB 169, 47 LT 581, 31 WR 141, 5 Asp MLC6, HL : : e272 205-201, Integrated Container Service Inc v British Traders insurance Co Ltd [1981] 2 SOEs Rep 460, [1981] Com LR 212 : 446 Integrated Container Service Inc v Brushy Traders insurance Co Ltd pes 1 Eieya s Rep 154, CA : ‘ : 446, 447, 450 Ionides v Harford (1859) 29 lJ Ex 36, 33 LTOS 186 3 : ‘ : f d oie PAL Table of cases xxxv PAGE Ionides v Pacific Insurance Co (1871) LR 6 QB 674, 41 LJQB 33, 25 LT 490, 1 Asp MLC 141; affd. (1872) LR 7 QB 517, 41 LJQB 190, 26 LT 738, 21 WR 22, 1 Asp MLC 330, Ex Ch . : 5 O77135 91593 Tonides v Pender (1872) 27 LT 244, [1861] AllER Rep 898, 1Asp MLC 432 : : e206) Ionides v Pender (1874) LR 9 QB 531, 43 ie 227, 30 LT 547, 22 WR 884, 2 Asp MLC 2606.4 F 57 Ireland v es (1872) LR 5 HL O95 [1861--73] AllER Rep 585, 41 LJQB 201, 27 LT 79, | Asp MLC 389, HL . 0) Irvin v Hine [1950] 1 KB 555, [1949] 2 All ER 1089, 65 TLR 768, 83 Ll L Rep 162 : ws03; 423, 424, 425, 449 Irving v Manning (1847) 1 HL Cas 287, 6 CB 391,6 LT 108, 10LT 877,HL . 194;.97,.375; ‘ 378 Irving v Richardson (1831) 2 B & Ad 193, 1 Mood & R 153,9 LJOSKB 225. - 22, 111, 461 Irwin v Eagle Star Insurance Co Ltd, The Jonie [1973] 2 Lloyd’s Rep 489 Issaias v Marine Insurance Co Ltd (1923) 15 LI L Rep 186, CA : : co 1S) erliG 152365 244, 245, 246 J Jackson v Isaacs (1858) 3 H & N 405, 27 LJ Ex 392 : Jackson v Mumford (1904) 52 WR 342, 20 TLR 172, 9 Com Gu 114, CA é ; meanot ; : 05 199 Jackson v Union Marine Insurance Co Ltd (1873) LR 10 CP 125, [1874-80] All ER Rep 317, 44 LJCP 27, 31 LT 789, 23 WR 169, 2 Asp MLC 435, Ex Ch . ; 228, 267, 354 Jacob v Gaviller (1902) 87 LT 26, 50 WR 428, 18 TLR 402, 7 Com Cas | 16 , : .8,178 James Yachts Ltd v Thames and Mersey Marine Insurance Co Ltd [1977] 1 Lloyd’s Rep 206 . 8,66, 310 Wailea aridNewcastle Ss Rent Tasirance Repeiatort Re [1895] 2 QB 90, 64 LJQB 560, 72 LT 648, 43 WR 530, 11 TLR 416, 7 Asp MLC 593, 14 R 444, CA : . 268, 354 Janson v Driefontein Consolidated Mines Ltd [1902] AC 484, [1900-3] All ER os426, 71 LJKB 857, 87 LT 372, 51 WR 142, 18 TLR 796, 7 Com Cas 268, HL é 8 Janson v Poole (1915) 84 LJKB 1543, 31 TLR 336, 20 Com Cas 232 : : : . 467 Janson (or Jamson) v Ralli. See Ralli v Janson Jardine v Leathley (1863) 3 B & S 700, 1 New ae 394, 32 PEs 13207 Wte7 83; Ae NS 1035, 11 WR 432, 1 Mar LC 288 : OO) Jenkins v Power (1817) 6M & S 282 2 Joel v Law Union and Crown Insurance Co [1908] 2 KB 863, 77 LJKB 1108, 99 LT 712, 24 TLR 898, 52 SolJo740,CA John W Hill, The. See Wells 309 54 Fargo Bank ircenationel Corp Vvleaden Steamsship Owns Mutual Insurance Association Ltd, The John W Hill John Worthington, The. See Standard Oil Co of New Jersey v United States, The John Worthington Johnson v Chapman (1865) 19 CBNS 563, 35 LJCP 23, 14 WR 264, sub nom. ayes pe The, Johnson v Chapman 15 LT 70, 2 Mar LC 404 : : Johnson v Sheddon (1802) 2 East 581 : : : j : ; ‘ 154 435 Johnston v Sutton (1779) Doug KB 254. 7 308 Jones v Neptune Marine Insurance Co (1872) )LR 7 QB 702, 4l LJQB 370, 27 CT 308, 1 Asp MLC416 xj. : SOU Jones v Nicholson (1854) 10 Exch 28,2DCLR 1236, 23 LJ Ex 330, 23 LTOS 146. 3 . 164 Jonie, The. See Irwin v Eagle Star Insurance Co Ltd, The Jonie Joyce v Kennard (1871) LR 7 QB 78, 71 LJQB 17, 25 LT 932, 20 WR 233, | oe MLC 194 24 Toyer’Vv Realm fete Co (1872)LR ii oe580, 41QE 356, 27 LT 144, l isc MLC 396. . 323,466 Raper oe Uns IGE 12d te ke ee a my wn ee edeS K Kacianoff vChina Traders Insurance Co Ltd [1914] 3 KB 1121, 83 LJKB 1393, 111 LT 404, 12 Asp MLC 524, 19 Com Cas 371, CA ; Kahn (or Kann) v W H Howard Bros & Co Ltd [1942] AC 50, [1941] 3 AllER 62, 1 10LKB : 593, 165 LT 257, 57 TLR 672, 46 Com Cas 335, 70 LI L Rep 173, HL 230 371 xxxvi Table of cases PAGE Kaltenbach v Mackenzie (1878) 3 CPD 467, 48 LJQB 9, 39 LT 215, 26 WR 844, 4 Asp MLC 39, CA : ‘ 348, 388, 389 Keevil and Keevil Ltd v Gere [1940] 3 All ER 346, 163 1BiB 238, 84 Sol Jo560, 19 Asp MLC SOOT O99 . 387, CA 662, 84 Ly 771, 17 TLR 527,45 Keighley, Maxsted & Ge:VvDiiant [1901] AC 240, 70 LJKBO SolJo 536, HL : : 381 Keith v Burrows (1877) 2 App he 636, HL 5 : ; ; : ‘ : Beh) Kelly v Walton (1808) 2Camp 155 . 388 Kemp v Halliday (1866) LR | QB 520, 6B & Ss728,35 LJQB156, 14 EL 762, I2JurNS 582, 14 WR 697, 2 Mar LC 370,ExCh y BYRS CS Kewley v Ryan (1794) 2 Hy BI 343. ; 93, 130 Kidston v Empire Marine Insurance Co (1967) LR 1 2 CP 357, 36 LcP 156, 1 16 ED Pet WR 769, 2 Mar LC 468, Ex Ch : . 444 King v Glover (1806) 2 Bos & PNR 206. Rs King v Victoria Insurance Co Ltd [1896] AC 250, 65 LJPC 38, 74,LT 206, 44 ‘WR 592, 12 TLR 285, PC 7 : 8, 458 King v Walker (1864) 3 H & C 209, 33 LJ Ex 395, begee NS 43, 13 WR 232, Ex Ch. 5 L389 Kingsford v Marshall (1832) 8 Bing 458, 1 Moo & S 657, 1 se 135 : Kingston v Phelps (1795) cited in 7 Term Rep 165 : : = 412 : & Mee, Se AOno lai Kleinwort v Shepard (1859) 1 E & E 447, 28 LJQB 147, 32 LTOS 313, 9 JurNS 863, 7 WR 22] ae ‘ +4 156 Kirby v Smith (1818) 1 B & Ald 672 : 5 : Knight v Cambridge (1 724) 8 Mod Rep 230, 2 Ld Ram 1349, 1 Seats 581. ey, Knight v Faith (1850) 15 QB 649, 19 LJQB 509, 15 LTOS 277, 14Jur1lll4 Knill v Hooper (1877) 2H & N 277, 26 LJ Ex 377, 29 LTOS 229,5WR791_ Knox v Wood (1808) 1 Camp 543. : LOA: . ‘ 348, 383 e302 Ae 48) Koebel v Saunders (1864) 17 CBNS 71, 4 New Rep 403, 33 Lop 310, 10 he 695, 10 Jur NS 920, 12 WR 1106, 2 Mar LC 68 ‘ 250 Koster v Reed (1826) 6 B & C19, 73 % 9 Dow & Ry KB 2, ais nom. Foster v pReeve 5 LJOSKB ; s ’ eoaO Kuehne and Nagel Inc v Baiden [1977] 1 Lloyd's Rep 90, USCA : ; eee Kulukundis v Norwich Union Fire Insurance Society [1937] 1 KB 1, [1936] 2 All ER 242, 1488n, 105 LJKB 703, 155 LT 114, 52 TLR 591, 80gee” 445, 41 Com Cas 239, 19 Asp MLC 37,55 LIL Rep55,CA_ . ; . 10,103, 330, 354, 355 Kylie, The. See Allden v Raven, The Kyte Kynance Sailing Ship Co v be Com Cas 123 oe ns104 LT 397, 27 TLR 306, 11 aoeMLC 596, 16 é e LOw20 L Ladbroke v Lee (1850) 4 DeG & Sm 106 . 22 Laertes, The (Cargo Ex) (1887) 12 PD 187, 56 WP 108, ay LT 502, 36 WR 111, 6 ee MLC 4 e : j EsO2 Laing v Glover (1813) 5 Tanne 49. Laing v Union Marine Insurance Co Ltd (1895) 1l TLR 359, l Com Cas 1legis : : : oa Oe 36; 132 Lakeland, The (1927) 29 LI L Rep 293, CA : 204 Landauer v Asser [1905] 2 KB 184, 74 LJKB 659, 93 Lr 20, 53 WR 534, 21 TLR 429, 10 Com Cas 265,DC . 321 Lane v Nixon (1866) LR 1 cP 412, Har & Ruth 585, 35 LJCP 243, 12 Jur NS 392, 14 WR 641. , eee Lang v Anderdon (1824) 3B & @}495, 5 Dow & RyKB 3935 3 3 LJOSKB 6 62 : . 284, 285 Langhorn v Allnutt (1812) 4‘Taunt 511. : ; a Nee Langhorn v Cologan (1812) 4 Taunt 330 . ; : 85, 278 La Nippon Marine Insurance Co v London General insurance Co (1923)14 1 Ll Lvee 298 F : 397 lenyen VvBlaitchard (181 12 Gan 597 ; - 1336 Lapwing, The [1940] P 112, 109 LJP 66, 165 LT 21I 56 TLR 520, 19 AspMLC. 363, 45 Com Cas 164, 66 LI L Rep 174 ; A . 160 Larchgrove (Owners) v R (1919) 36 TLR 108, l u L Rep 408, 498 204 Laroche v Oswin (1810) 12 East 131 Latvijas Banka (Bank of Latvia) . v Adams (1936) 54 LI L Rep 82 : ‘ : . : : : ‘ rats 3 F F : . 398 Table of cases xxxvii PAGE Laurel, The, Stewart v Greenock Marine Insurance Co (1848). See Stewart v Greenock Marine Insurance Co Laveroni v Drury (1852) 8 Exch 166, 22 * Ex 2, 16 Jur 1024, 1 WR 55, sub nom. Leveroni v Drury 20LTOS178 ; : la? Lavington Court, The. See Court Tine TidVR, The LavingtonCoutt Lawrence v Aberdein (1821) 5 B & Ald 107 : : ‘ : 3 142, 324, 328 Leatham v Terry (1803) 3 Bos& P 479. . . 396 Leathly v Hunter (1831) 7 Bing 517, 1 Cr & J 423, 5 Moo & P 457, 2 Tyr 355, 9 LJOS Ex 118,ExCh . 131 Lee v Southern Tntiauee Co (1870) LR 5 cP 397, 39 LJCP 218, 29 LT 443, 18 WR 863, 3 Mar LC 393. 3 444 Lehigh and Wilkes-Barre Coal Co VvGlobe aaa Réieen Fire issarance Co (1925)26 LiL Rep 82 ; : : : ; : sl Leigh v Adams (1871) 25 LT 566, l i MLC 147 : 3 he esha BOS Leitrim, The [1902] P 256, 71 LJP 108, 87 LT 240, 51 WR 158, 18 TLR 819, 9 Asp MLC 317, sub nom. Hudson v British and Foreign Marine Insurance Co8 Com Cas6 . wg oes 416 Lemos v British and Foreign Marine Insurance Co Ltd (1931) 39 LI L Rep 275. : 4, 341 Leon v Casey [1932] 2 KB 576, [1932] All ER Rep 484, 101 sail578, 147 LT 165, 48 TLR 452, 37 Com Cas 330, 18 Asp MLC 300, CA ; 3 woos Leonard v Leyland & Co (1902) 18TLR727_. ; Letchford v Oldham (1880) 5 QBD 538, 49 LJQB 458, 28 WR 789, CA : . : 297 : : é a ae Leveroni v Drury. See Laveroni v Drury Levy v Barnard (1818) 2 Moore CP 34,8 Taunt 149. : : 5 : : 2 ODT, Lewis v Rucker (1761) 2 Burr 1167 . : ; . 434,435 Leyland Shipping Co v Norwich Union Fire isarance Saclay [1918] AC 350, [1918-19] All ER Rep 443, 87 LJKB 395, 118 LT 120, 34 TLR 221, 62 Sol Jo 307, 14 Asp MLC 258, HL gan ‘ 228 Liberian Gane Reeney the VvMosse [1977] 2 Lloyd's Rey 560 . - 62, 69, Ute 80, 109, 110, 111 Lidgett v Secretan (1870) LR 5 CP 190, 39 LJCP 196, 22 LT 272, 18 WR 692, 3 Mar LC 309) Sar : 122 Lind v Mitchell (1928) 98 LJKB 120, [1928] AllER Rep 447, 140 LT 261, 45 TLR 54, 17 Asp MLC 562, 34 Com Cas 81, 32 LI L Rep 70, CA é i . 145, 160, 232, 365 Lindsay v Janson (1859) 4H & N 699, 28 LJ Ex 315, 3 LT 341 5 ao IIe) Lindsay v Klein, The Tatjana [1911] AC 194, 80 LJPC 161, 104 LT 261, 11 Te MLC 562, HILis.. P » 5 298 Link v General amines Co otAgiericas The Rescen Pance (1944) 77 Ll165Rep 431 a Lishman v Northern Maritime Insurance Co (1875) LR 10 CP 179, 44 LJCP 185, 32 LT 170, 23 WR 733, 2 Asp MLC 504, ExCh . : Litsion Pride, The. See Black King Shipping Corp VvMosse: The ee 5 Es 67, 289 Pride Liverpool and London War Risks Association Ltd v Ocran SS Co Ltd [1948] AC 243, [1947] 2 All ER 586, [1948] LJR 304, 177 LT 623, 63 TLR 594, 92 Sol Jo 25, 81 LI L Rep 1, Hier ; fe 201206 Liverpool and ee War Risks eeaariee iisocintion Ltd Vv Marine Winderwriters of SS Richard de Larrinaga [1921] 2 AC 141, [1921] All ER Rep 72, 91 LJKB 31, 125 LT 548, 37 TLR 692, 15 Asp MLC 353, 26 Com Cas 352, 7 LI L AP NSS tie. : 199 Livie v Janson (1810) 12 East 648. ; : : 4 . 440 Livingstone, The (1904) 130 Fed Rep 746. F : 49) Lloyd v Fleming (1872) LR 7 QB 299, 41 LJQB 93, 20 WR 296, ah nom.steva v Fleming, Loyd v Spence 25 LT 824, 1 Asp MLC 192. : ; 28, 320 Lloyd (J J) Instruments Ltd v Northern Star Insurance Co Lid, The Mixne Jayet 1 Lloyd’s Rep 264 Lockyer v Offley (1786) 1 Term Rep:2I2 0% : : a G9 London and North Western Rly Co v Glyn (1859) 1 E & E 652, 28 LJOQB 188, 33 LTOS 199, 5 Jur NS 1004, 7 WR 238 2 25 London County Commercial Reinsurance Office Led, Re [1922] 2 Ch 67, ‘91iJ Ch 337, 127 LT 20, 38 TLR 399, 15 Asp MLC 553, 10 L1L Rep 100, 370 . ; al ART xxxvili Table of cases PAGE London General Insurance Co v General Marine Underwriters’ Association [1921] 1 KB 104, 89 LJKB 1245, 124 LT 67, 36 TLR 887, 15 Asp MLC 94, 26 Com Cas 52, 4 LI L Rep 38, . \ 44, 47, 59, 465 : é CA@exc Loraine v Themlinson (1781) 2Doug KB 585 Lothian v Henderson (1803) 3 Bos & P 499, HL : . : ; : : tote) 5 286, 288 s . Lower Rhine and Wiirtemberg Insurance Association v ‘Sedewpick [1898] 1QB 739,67 LJOB 330, 46 WR 380, 78 LT 496, 14 TLR 226, 8 Asp MLC 380; revsd. [1899] 1 QB 179, 68 LJQB 186, 80 LT 6, 47 WR 261, 15 TLR 65, 8 Asp MLC 466, 4 Com Cas 14, CA > 28; 79 Lower Rhine and Wiirtemberg Insurance Association v Sedgwick [1899] 1 QB 179, 68 LJQB 186, 80 LT 6, 47 WR 261, 15 TLR 65, 8 Asp MLC 466, 4 Com Cas 14, CA ‘ 467 Lowlands SS Co Ltd v North of England Sere and erage Association (1921) 6 Ll i Rep 230 : ; : a as Loyd v Fleming. See Lloyd VvHone Loyd v Spence. See Lloyd v Fleming Lubbock v Potts (1806) 7 East 449,3 Smith KB401_. : : 3 0 : Ben hot) Lubbock v Rowcroft (1803) 5 Esp 50 3 : : : : : : feo) Lucena v Craufurd (1806) 2 Bos & PNR 269, HL ; 7 LO; 265e1011 Luckie v Bushby (1853) 13 B & C 864, 1 CLR 685, 22 oat220, 21 LTOS 186, 17 Jur625, | WR 455 : oe IE Luke v Lyde (or Lloyd) (1759) 9 Burr 882, 1 Wm Bl 190 . Pe Lynch v Hamilton eae 3 Taunt 37; affd. sub nom. 5 aev Deistord (181 1)14 East 494, Ex Ch. . : : AS) 40, 55, 69, 73 M Maanss v Henderson (1801) 1 East 335 : é : . é : M’Andrew v Bell (1795) 1 Esp 373. : Macbeth & Co v King (1916) 86 LJKB 1004, 1 15 LT 221, 32 TLR 581, 13 ins MLC ; : M’ Carthy VvAbel (1804) 5 East 388, 1Smith KB 524 , ; : : : M’Connell v Hector (1802) 3 Bos & P 113. : : ; : ooo . 34, 57, 320 442 207, 349 Re RH RO : . 286 M‘Cowan v Baine and Johnston, The Niobe [1891] AC 401, [1891-4] All ER Rep 343, 65 LT 502, 7 TLR 713,7 Asp MLC 89, HL. : : 2 T2544 McDermott v Nationa! Benefit Life Assurance Co (1921) 7 Ul D Rep Oe ; : . M’Dougle v Royal Exchange Assurance Co (1815) 4 Camp 283. : 3 ; Pane: Macdowall v Fraser (1779) 1 Doug KB 260 : ate] Mackenzie v Whitworth (1875) 1 Ex D 36, 45 LJQB 233, 33 LT 655, 24 WR 287, 3 Aap MLC 81,CA Mackintosh v Marshall (1843) rm M & Ww 116, 12 LJ Ex 337, 6 LT 581 ‘ : ; 314 3| 3 . 26, 108, 111 44 M’Swiney v Royal Exchange Assurance (1849) 14 OB 634; revsd. sub nom. Royal Buchasice Assurance v M’Swiney (1850) 14 QB 646, 19 LJQB 222, 16 LTOS 22, 14 Jur 998, ExCh . é Magnus v Bucemer (1852) 11 CB 876, 21 LJCP 119, 18 LTOS 276, Ales 480 . Maignen & Co v National Benefit Assurance Co Ltd (1922) 38 TLR . 26, 27, 108 3 on V413 257, 10 LI L Rep 30 : Main, The [1894] P 320, 63 LJP 69, 70 LT 247, 10 TLR 242, 7 Asp MLC 424, 6 R 775 Mallough v Barber (1815)4Camp150_—«. : Man v Shiffner (1802) 2 East 523. é 5 ‘ : ; : ro eae) OOS 94 eo? R 2 335 Manchester Liners Ltd v British and Poor Maur Remains Co Ltd (1901)86 8 LT 148, 18 TLR 183, 9 Asp MLC 266, 7Com Cas 26. 22s Manfield v Maitland (1821) 4B & Ald 582 : F : A : : : peel Mann v Forrester (1814) 4 Camp 60 : 30 Mann Macneal and Steeves Ltd v Capital and Gountics Insurance Co Ltd [1921] 2 KB 300, 90 LJKB 846, 124 LT 778, 37 TLR 247, 15 on MLC 225, 26 Com Cas 132, 5 LI L Rep 203, 424, CA ‘ > 0; 51593 Mansell & Co v Hoade (1903) 20 TLR 150 : 2 . 348 Marazura Navegacion SA v Oceanus Mutual Wnderwrieng Association (Bermuda) Ltd and John Laing ‘(Menaeemens) Ltd [1977] 1 Lloyd’s Rep 283 ; : : : 479 Table of cases xxxix PAGE Margetts and Ocean Accident and Guarantee Corpn, Re [1901] 2 KB 792, 70 LJKB 762, 85 LT 94, 49 WR 669, 17 TLR 538, 45 SolJo 557, 9 Asp MLC 217, DC Q 172 Marine Insurance Co v China Transpacific SS Co (1886) 11 App Cas 573, 56 LJQB 100, 55 LT 491, 35 WR 169, 2 TLR 857,6 Asp MLC 68, HL. Marine Insurance Co Ltd v Grimmer [1944] 2 All ER 197, 77 LIL Repaé 461, CA Marine Sulphur Queen, The [1970] 2 Lloyd’s Rep 285 ; : - ~ 416,421 : fe 32 ; . 456 Maris v London Assurance (1935) 52 LI L Rep 211, CA ; 0240 Maritime Insurance Co v Stearns [1901] 2 KB 912, 71 LJKB 86, 50 WR 238, 7 TLR 613, 6 Com Cas 182 ; SEn26 Maritime Marine Insurance Co Ltd Vv Fire Re- Insurance Goan Lid. See haskell Maite Insurance Co v Fire Insurance Corpn Ltd Marmion vJohnston (1928) 31 LI L Rep 78 ; Za : i ; i fi, 298 Marryat v Wilson (1799). See Wilson v Marryat (1798) Marsden v Reid (1803) 3 East 572. 3 78, 130 Marstrand Fishing Co Ltd v Beer [1937] 1 “AllER 158, 156 LT 196, 53 TLR 287, 81 Sol Jo 36, 19 Asp MLC 100, 56 LI L Rep 163 : ; . 165, 347, 366, 369 Marten v Nippon Sea and Land Insurance Co Ltd (1898) 14 TLR 333, 3 Com Cas 164 . 466 Marten v SS Owners’ Underwriting Association (1902) 71 LJKB 718, 87 LT 208, 50 WR 587, 18 TLR 613, 9 Asp MLC 339, 7 Com Cas 195 ; ; . 97, 374, 465 Marten v Vestey Bros Ltd [1920] AC 307, [1920] All ER Rep 603, 89 LJKB 663, 122 Er 785, 36 TLR 228, 14 Asp MLC 600, 25 Com Cas 175, 2 LI L — 113, HL . e LOS 20 Martin v Crokatt (1811) 14 East 465 : ; Martin v Granger. See Grainger v Martin Martin v Sitwell (1691) 1 Show 156, 1 Holt KB 25 ; : ; 5 : + 882 : : 5 RON) : : 63, 64 Maryland, The. See Atlantic Transport Co v R, The Motyland Mata Hari, The. See Pindos Shipping Corpn v Raven, The Mata Hari Mathie v Argonaut Marine Insurance Co Ltd (1925) 21 LI L Rep 145, HL Matveieff& Co v Crossfield (1903) 51 WR 365, 19 TLR 182, 47 SolJo 258, 8 Com Cas 120 326 Mezacakis Bros Vv Parnes, Withy & Co (1924) 18 ul L Rep 152, CA ; ‘ 22200 Medina Princess, The. See Helmville Ltd v Yorkshire Insurance Co Ltd, The Medina Princess Mees v Importers’ and Exporters’ Marine Insurance Co Ltd (1923) 15 LIL Rep201,CA . 397 Megara, The. See Aronsen (Oscar L) Inc v uae The ee Mellish v Allnutt (1813) 2M & S 106 ‘ ; 3 ‘ ‘ oS Mellish v Andrews (1812) 15 East 13 i oe SEARS ED) Mentz, Decker & Co v Maritime Insurance Co [1910] 1 KB 132, 79 LJKB 104, ‘101 LT 808, 11 Asp MLC 339, 15 Com Cas 17 so; ONG, 135,165 Mercantile Marine Insurance Co v Taerienen (1864) 5B & S 765, 5 New ae 82, 34 LJQB 11,11 LT 340,11 Jur NS62,13WR141_ s See No23 Mercantile SS Co Ltd v Tyser (1881) 7 QBD 73, 29 WR 790, 5 Asp MLC a ; . 52, 228, 267 Merchant Shipping Co v Armitage (1873) LR 9 OB 99, 43 LJOB 4, 29 LT 809, 2 Asp MLC 185,ExCh . Merchants’ Marine Ipaerance Cov Liverpool Marine and Geuer ieee 351 Co (1928) 97 LJKB 589, [1928] All ER Rep 452, 139 LT 184, 44 TLR 512, 17 Asp MLC 475, 33 Com Cas 294,31 LIL Rep45,CA_ . 469 Merchants’ Marine Insurance Co Ltd v North of Eucand Provecune tnd jodemury Association (1926) 43 TLR 107, 71 Sol Jo 82, 32 Com Cas 165, 26 LI L Rep 201, CAN res 173 Metcalfe v Bonn Trdaworks Co (187 7) 2 2 QBD423, 46 #6 1JQB443, 36 LT 451, 25 WR 720, 3 Asp MLC 407, CA ; Gaol Metcalfe v Parry (1814) 4 Camp 123 el Lol Meyer v Ralli (1876) | CPD 338, [1874-80] All ER Rep 1086, 45 LJQB 741, 35 LT 838, 24 WR 963, 3 Asp MLC 324 : fe mel2 7442 Miceli v Union Marine and General Teuuranice Ca Ltd (1938) 60 LI t Rep 275, CA ; 32, 147 Michael v Gillespy (1857) 2 CBNS 627, 26 LJCP 306, 29 LTOS 162, 3 Jur NS1219_ . a 43 Michael, The. See Piermay Shipping Co SA and Brandt’s Ltd v Chester, The Michael Michalos (N) & Sons Maritime SA v Prudential Assurance Co Ltd, The Zinovia [1984]2 Lloyd’s Rep 264. : : at 2425247 a 456 Miller v Tetherington (1862) 7 H & N 954, 31 - Ex 363, S LT 231, 1, 8 JrNS 1039, 10 WR 356, 1 Mar LC 388, Ex Ch : ye Middlewood v Blakes (1797) 7 Tern Rep 162 , eePat) xl Table of cases PAGE Miller v Warre (1825). See Warre v Miller Miller v Woodfall (1857) 8 E & B 493; 27 LJQB 120, 30 LTOS 240, 4 Jur NS 302 : 3) ah)8) Milles v Fletcher (1779) 1 Doug KB 231. : : e303 Milward v Hibbert (1842) 3 QB 120, 2 Gal & Dav 142, l LJQB 137, 7 Le 76, 6 Jur US en lOd7326 Minett v Anderie (1794) Beake 277 : 5 Miss Jay Jay, The. See Lloyd (J J) Instruments Ltd Vv Norhoin Star Tnsirance eh Ltd, The Miss Jay Jay s Mitera, The (1969). See Atlantic Maritime Carriers SA v Hellenic Mutual War Risks Association Ltd, Capetandiamantis Compania Maritima SA, Eastern Seas Transport ER Corpn and Orient Shipping Corpn v Hellenic Mutual War Risks Association Ltd (1968) Mitrovitch Bros & Co v Merchants Marine Insurance Co Ltd (1923) 14 LIL Rep 25 . . Moir v Royal Exchange Assurance Co (1815) Jy 2845289 3M &S461_ . Montedison SpA v Icroma SpA, The Caspian Sea [1979] 3 All ER 378, [1980] 1 WLR 48, 123 SolJo 551, [1980] 1 Lloyd’s Rep 91 : : Montgomery & Co v Indemnity Mutual Marine Insurance Co [1902] 1 ‘KB 734, at LJKB 467, 86 LT 462, 50 WR 440, 18 TLR 479, 46 Sol Jo 410, 9 Asp MLC 289, 7 Com Cas 120, CA 5 Montoya v London Restrance Cs (1851) 6 Buch 451, 20 LJ Ex 2oay V7 LTOS 82 : Montreal Light, Heat and Power Co v Sedgwick [1910] AC 598, 80 LJPC 11, 103 LT 234, 26 TLR 657, 11 Asp MLC 437, PC : 208 19 184 143 350 Moor Line v King and United Kingdom Mutual War Rick: Amocation (1920) 36 TLR 799, 4 LIL Rep 286 : Moore v Evans [1918] AC 185, 87 LJKB 207, 2 117 Jah 761, 34 TL R 51, 622 Sol Jo 69, 23 Com Cas 124, HL . 2 204 Moore v Mourgue (1776) 2 Gow 479 owl) : F ‘ : He 362 Moore v Taylor (1834) 1 Ad & El 25, 3 Nev & MKB 406, 3 LJKB 132 F « 120 Moran, Galloway & Co v Uzielli [1905] 2 KB 555, 74 pa 494, 54 WR 250, 21 TLR 378, 10 Com Cas 203. ° 3 ye) NOS Morck v Abel (1802) 3 Bos & P SY va 4 : . 84 Mordy v Jones (1825) 4 B & C 394, 6 Dow & Ry KB 479, 3 LJOSKB 250. : ‘ e227, Morgan v Price (1849) 4 Exch 615, 19 LJ Ex 201,14 LTOS257_—. : : : . 461 Morice v Anderson (1876). See Anderson v Morice (1875) (1876) Morrison v Universal Marine Insurance Co ae) LR 8 Exch 197, 42 a Ex 115, 21 WR . : Moss v Byrom (1795) 6 ere Rep 379 774,ExCh : : S : ‘ 5 ealGS Moss v Smith (1850) 9 CB 94, 19 LJCP 225, 14 LTOS 376, aye 1003 F : : > Motteux v Governor & Co of London Assurance (1739) 1 Atk 545 Mount v Larkins (1831) 8 Bing 108, 1 Moo & S 165, 1 LJCP 20 : 5 : : j . 274 126, 136 : . : 40535;:67 Soe Mountain v Whittle [1921] 1 AC 615, [1921] All ER Rep 626, 90 LJKB 699, 125 EA 93360) SolJo 415, 15 Asp MLC 255, 6 LI L Rep 378, HL . : . 144, 148, 268, 306 Mouse’s Case (1608) 12 Co Rep 63, cited in 2 Bulst 280, as nom. Greve end pee Case 1 Roll Rep 79 . Moxon v Atkins (1812) 3 Camp 200. : : : 5 4 Z ; GS 46. 116, 326 Muirhead v Forth and North Sea Steamboat Mutual Tcgane AtocistionUH see AC 72, 10 TLR 82,6 R 59, HL : : p : : . 288 Muller v Thompson (1811) 2 Camp 610 oy : ay Munro, Brice & Cov Marten Lee 3 KB 94, 89 LJKB 1009, 123 1 562, 36 TLR 241, 15 Asp MLC 45, 25 Com Cas 112,2 LIL Rep2,CA . ; . 208, 349 Munro, Brice & Co v War Risks Association [1918] 2 KB 78, [1916— uh‘All ER Re 88 LJKB 509, 118 LT 708, 34 TLR 331, 14 Asp MLC 312 Munroe, The [1893] P 248,70 LT 246, 7 hep MLC 407,1 R642 : . ; : 981n, : . . 349 414 N Nassau Bay, The. See Costain-Blankevoort (UK) Dredging Co Ltd v Davenport, The Nassau Bay National Benefit Assurance Co Ltd (Application of Sthyr), Re (1933) 45 LI L Rep 147 = B13; 178 Table of cases xli PAGE Naviera de Canarias SA v Nacional Hispanica Aseguradora SA [1978] AC 853, [1977] 1 All ER 625, [1977] 2 WLR 442, 121 SolJo 186, [1977] 1 Lloyd’s Rep 457, HL 2 230;263 Navigators and General Insurance Co Ltd v Rupee [1962] 1 All ER 97, eed 1 WLR 173, 106 SolJo 135, [1961] 2 Lloyd’s Rep 415, CA F Navone v Haddon (1850) 9 CB 30, 19 LJCP 161, 14 LTOS 419 ; : Naylor v Taylor (1829) 9 B & C718, Dan & LI 240, 4 Man & Ry KB 526, 7 LJOS 311 Near East Relief vKing, Chasseur & Co Ltdnee 36 LI L Rep 91 269 O00 oe eS) 2 KB 40, 99 aes 522, 35 Com Cas 104, : 337 Neilson v De Lacour (1797) 2 Esp 618 : Nelson v Empress Assurance Corpn Ltd [1905] 2 KB 281, 74 LJKB 699, 93 LT 62, 53 WR S27 648, 21 TLR 555, 10 Asp MLC 68, 10 Com Cas 237, CA ; 465 Nelson v Salvador (1829) Dan & Ll 219, Mood & M 309 ° . é ; ; : noo Nesbitt v Lushington (1792) 4 Term Rep 783. : 156 Neter (N E) & Co v Licenses and General Insurance Co Ltd [1944] 1 AllER 341, 170 LT 165,60 TLR 201,77 LIL Rep 202... : 149 Neue Fischmehl Vertribs-Gesellschaft Haselhorst OH! VvYorkshire "neupance Co Ltd (1934) DOLE Rep ls: : 76, 300 New Zealand Shipping Co Ltd VvDube [1914] 2 KB 682, 83 LJKB11300, 1 1 LT 37, 30 TLR 385, 12 Asp MLC 507, 19 Com Cas 223 j 9 Nicholson v Power (1869) 20 LT 580, 3 Mar LC 236, Ex Ch . 67 Nickels & Co vy London and Provincial Marine and General Trenance Co (1900 ) 70 LJQB 29°17 EER 54, 6'Com Cas 15" - : ; F230 : : 67, 137 Noble v Kennoway (1780) 2 Doug KB 510, [1775-1802] All ER Rep 439 ; ; 46, 326 Nonnen v Kettlewell (1812) 16 East 176. ¢ : A . ; 97, 374 Niger Co Ltd v Guardian Assurance Co Ltd (1922) 13 Ll L Rep Hi; HL Niobe, The. See M‘Cowan v Baine and Johnston, The Niobe North Atlantic SS Co Ltd v Bure (1904) 20 TLR 266, 9 om Cis 164 : ; 02 North British Fishing Boat Insurance Co Ltd v Starr (1922) 13 LIL Rep 206. 21) 46,4759 North British Rubber Co v Cheetham (1938) 61 Ll L Rep 337,CA. 0398 North Shipping Co Ltd v Union Marine Insurance Co Ltd (1919) 35 TLR 292, 24 Gem Cas 161,CA 3 83 North of England Iron Ss Tnstvance INE Vv Wrenone (1870)) LR 5 QB 244, 39 LJQB 81, 21 LT 822, 18 WR 520, 3 Mar LC 330 . 94 North of England Oil-Cake Co v Archangel Insurance Co (1875) LR 10 QB 249, [1874 80] All ER Rep 875, 44 LJQB 121, 32 LT 561, 24 WR 162, 2 Asp MLC 571,DC 28, 321 Northwestern Mutual Life Assurance Co v Linard, The Vainqueur [1973] 2 Lloyd’s Rep PETES nes : ; 345243 Norwich Union Fire inaance Sciety Vv Galonial Mutual Fire Tasurasice Co [1922] 2 KB 461, [1922] All ER Rep 513, 91 LJKB 881, 128 LT 121, 38 TLR 822, 66 SolJo 720, 16 Ae MLC 98, 28 Com Cas 20. 278 Norwich Union Fire Insurance Society Ltd Vv Prite Ltd [1934] AC 455, [1934] All ER Rep 352, 103 LJPC 115, 151 LT 309, 50 TLR 454, 78 SolJo 412, 40 Com Cas 132, 49 LI L Rep55,PC . Se O00 Nottebohn v Richter (1886)) 18 QBD 63, 56 LJQB 33, 35 WR 300, 3TLR: 30, CA . 102 Nourse v Liverpool Sailing Ship Owners’ Mutual Protection and Indemnity Association [1896] 2 QB 16, 65 LJQB 507, 74 LT 543, 44 WR 500, 12 TLR 406, ie 8 MLC 144, 1 Com Cas 388,CA . : : 5 2 193 Nutt v Bourdieu (1786) 1 Deri Rep 393 ; 5 5 , ; 3 : : 162, 163 O Ocean, A/S v Black Sea and Baltic General Insurance Co Ltd (1935) 51 LI L Rep 305, CAs “2 4029, 420 Oceanic SS Co v Faber (1907) 97 LT 466, 23 TLR 673, 10 ne MLC 515, 13 Con Cas 28, CA. *. 159 Oceanic Steam Naviestion oF Ltd v MEAN (1934) 51 TLR 67, 78 Sol Jo838, “40 Con Cas 108,50LILRep1,CA_ . Olive v Smith (1813) 5 Taunt 56, 2 Rose 122 i ; Oliverson v Brightman (1846) 8 QB 781, 15 LJQB 274, PyLTOS 81,Jour 875 Oliverson v Loughnan (1815) cited in 2B & Ald 322. . : : 394 1334 : 1 : 33, ; e299 xlii Table of cases PAGE Oriental Fire and General Insurance Co Ltd v American President Lines Ltd and Cotton Trading Corpn of San Francisco [1968] 2 Lloyd’s Rep 372. : : ‘ . 458 Oswell v Vigne (1812) 15 East 70. ; elo” Otago Farmers’ Co-op Association of New Testand Vv hopes 692, 102 LT 711, 11 Asp MLC 403, 15 Com Cas 28 Ougier v Jennings (1800) (1910)2 2 KB 145, 79 ak : 26 1Camp505n_ . : Overseas Commodities Ltd v Style [1958] 1 Layers Rep 546°. : Overseas Marine Insurance Co Ltd, Re (1930) 36 LI L Rep 183, CA : : . 46, 130 “108, 227, 2041292 ; : . 468 P Pacific Queen Fisheries v L Symes, The Pacific Queen [1963] 2 Lloyd’s Rep 201,CA . 49, 52, 66, 169, 306, 309 Padre Island, The. See Socony Mobil Oil Co Inc, Mobil Oil Co Ltd and Mobil Oil AG v West of England Ship Owners Mutual Insurance Association (London) Ltd, The Padre Island Padre Island, The. See Steam Tanker Padre Island Inc and Pullman Bank and Trust Co v London Assurance, Guildhall Insurance Co, The Padre Island Palace Shipping Co Ltd v Caine. See Caine v Palace Steam Shipping Co Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd, The Dias [1972] 2 OB 625, [1972] 2 WLR 1425, 116 Sol Jo 685, [1972] 2 Lloyd’s Rep 60, sub nom. Dias, The, Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltdee 2 AIlER IE CIN 5 7 Palmer v Blackburn (1822) Baez 61,7 Moore cP 339, l LJOSCP p 5 Palmer v Naylor (1854) 10 Exch 382, 2 CLR 1202, 23 x Ex 323, 24 LTOS 83, 18 Jur 961, 2 WR 621,ExCh . an Palmer v Warren Insurance es (1840) 1 Scary 360 Palyart v Leckie (1817) 6M & S 290 ; : . . : ; 6243 eae : las 2s ee Be Panamanian Oriental SS Corpn v Wright [1970] 2 Lloyd’s Rep 365; on petal [1971] 2 All ER 1028, [1971] 1 WLR 882, 115 SolJo 345, [1971] 1 Lloyd’s Rep 487,CA . 261, 348, 371, 385 Papadimitriou v Henderson [1939] 3 All ER 908, 55 TLR 1035, 45 Com Cas 29, 64 LI L Rep 345 e ; : Papoose, The. See Giiteam Garo Ltd Vv Retenee hors Co, The Papen 1909239, 599 Parente (Robert A) v Bayville Marine Inc and General Insurance Co of America [1975] 1 Lloyd’s Rep 333. : Parfitt v Thompson (1844) 13 M & Ww692% 14 LJ Ex 73, 4 LTOS 1 16, 138 Park v Hamond (or Hammond) 344; ; ae 2 Marsh : : 3 Parkin v Dick (1809) 11 East 502,2 Camp 221 e254: 5 SU 189, 6 Taunt 495, Holt NP 82n, 4 Camp ; Parker v Potts (1815) 3 Dow. 23, HL : ; : mn 5433 : ‘ ‘ : : : ‘ a 08s . 3 ; 3 : F : . 308 Parkin v Tunno (1809) 11 East 22,2Camp59_ . F ; ; , : : e230) Parmeter v Cousins (1809) 2Camp 235. ; é ; ; : : : 115, 299 Parmeter v Todhunter (1808) 1 Camp 541 : ; : Sea Pateras v Royal Exchange Assurance (1934) 78 SolJo 569, 49 LOW, Rep 400 ; 2 2395245 Paterson v Harris (1861) 1 B & S 336, 30 ae 5545, OD oS: a cadNS 1276, 9 WR 743, 1 Mar LC 124. ‘ Patrick v Eames (1813) 3 Camp 441 : Patterson v Ritchie (1815)4M&S393_. ‘ : : ; ; ; 27, 142 2 : : : : ZA SNS) : ; : : ; =. 376 Pawson v Watson (1778) 1 Doug KB 12n, 2 Cowp 785 : : : : , 78, 281 Payne v Hutchinson (1810) 2 Taunt 405n . : a aks) Pearson v Commercial Union Assurance Co (1876) 1 App Cas 498, 45 LJOB 761, 35 LT 445, 24 WR 951, 3 Asp MLC 275, HL : e Pelly v Royal Exchange Assurance Co (1757) 1 Bon 341, [1558- 1774] AllER Rep 405 Pelton SS Co Ltd v North of England sees and Indemnity Association, The Zelo (1925) 22L1LRep510 , me 20) 326 L2 Peninsular and Oriental Branch Service Vv Commonreaun Buone Reweeaancs The Geelong (1922) 13 LIL Rep 230 Pentland, The (1897) 13 TLR 430. | . : é ‘ ; ; : cateartt , ; ‘ ; . ; , ’ 5h O07 200 Table of cases xiii PAGE Pesquerias Secaderos de Espana SA v Beer (1946) 175 LT 495, 79 LI L Rep 417; revsd. (1947) 80 LI L Rep 318, CA; on appeal [1949] 1 All ER ees 93 Sol Jo 371, 82 Ll L Rep 501, Hes 392 Petros M Nomikos Lid v Rberoa 64 Ll L Rep 45, HL ; 329, 357, 358, 363, 364, 365, 375 Petros M Nomikos Ltd v Robertson. See Robertson v Petros M Nomikos Ltd Phelps v Auldjo (1809) 2 Camp 350. : 5 28 Phillips v Irving (1844) 7 Man & G 325, 8 Scott NR 3; 13 LJCP 145, 3 LTOS 55 : Ferl36 Phillips v Nairne (1847) 4 CB 343, 16 LJCP 194, 9 LTOS 295, 11Jur 455 3025372 Philpott v Swann (1861) 11 CBNS 270, 30 LJCP 358, 5 LT 183, 7 Jur NS 1291, 1 Mar LC 1G) las 227 Phoenix Insurance ‘Co of Hartiord VvDe Monchy (1929) 141 LT 439, [1929] All ER Rep 531, 45 TLR 543, 18 Asp MLC 7, 35 Com Cas 67, 34 LIL Rep 201,HL . 142 Phoenix Insurance Co of Hartford v De Monchy (1929). See De Monchy v Phochiix Tneeranee Co of Hartford (1928) Phyn v Royal Exchange Assurance Co (1798) 7 Term Rep 505 : : : . # 162, 166 Pickersgill (William) & Sons Ltd v London and Provincial Marine and General Insurance Co Ltd [1912] 3 KB 614, [1911-13] All ER Rep 861, 82 LJKB 130, 107 LT 305, 28 TLR 591, 57 Sol Jo 11, 12 Asp MLC 263, 18 Com Cas 1 ; 317 Pickup v Thames and Mersey Marine Insurance Co Ltd (1878) 3 QBD 594, 47 LJQB 749, 39 LT 341, 26 WR 689, 4 Asp MLC 43,CA_ 298 Piermay Shipping Co SA and Brandt’s Ltd v Chester, The Michael [1979] i Lloyds Rep 55 167, 245 Pillerem Vv CliffRiciardson Boa Ltd ad Ricierdson! (Suitzerand General fectranee Co, third party) [1977] 1 Lloyd’s Rep 297 : Pindos Shipping Corpn v Raven, The Mata Hari [1983] 2 Eloy: Rep 449 : : : 2296 27,418 Pink v Fleming (1890) 25 QBD 396, 59 LJQB 151, 559, 63 LT 413, 6 TLR 432, 6 Asp MLC 554, CA : ; : ; 5 Piper v Royal Exchange earance (1932) 44 LI ‘3Rep 103 Pipon v Cope (1808) 1 Camp 434. . : : 3 4 2 5 As) 17, 48, 61, 239 162, 164, 168 Pirie v Steele (1837) 8 C & P 200, 2 Mood & R 49,2)LT 382 . : : ; : 5 A19 Pirie & Co v Middle Dock Co (1881) 44 LT 426, 4 Asp MLC 388. etl Pitman v Universal Marine Insurance Co er )9 ee 192, 51 ae 561, 46 LT 863, 30 WR 906, 4 Asp MLC 544,CA . : a OL A2D Pittegrew v Pringle (1832) 3B&Ad514 . : : , : 3 ; : art Baas} Planche v Fletcher (1779) | Doug KB 251, [1775-1802] All ER Rep 409 Poingdestre v Royal Exchange Corpn (1826) Ry & M378. c : Pollard v Bell (1800) 8 Term Rep 434 < : : . 46, 308 a Al9 ; 288 Polpen Shipping Co Ltd v Commercial Union Rouse Co Ltd [1943] KB 161,[1943] l All ER 162, 112 LJKB 198, 168 LT 143, 59 TLR 106, 87 SolJo 129, 74 LI L Rep 157 . 174 Polurrian SS Co Ltd v Young (1913) 84 LJKB 1025, 109 LT 901, 30 TLR 126, 12 Asp MLC 449, 19 Com Cas 143; affd. [1915] 1 KB 922, [1914-15] All ER Rep 116, 84 LJKB 1025, 112 LT 1053, 31 TLR 211, 59 SolJo 285, 13 Asp MLC 59, 20 Com Cas 152,CA . . 364, 366, 367, 369, 376, 377 Pomeranian, The [1895] P 349, 65 LJP 39 : Popi M, The. See Rhesa Shipping Co SA v Edmunds, The Papi M ; : ‘ . 4,433, 444 Portmar, The. See Calmar SS Corpn v Scott, The Portmar Portvale SS Co Ltd v Royal Exchange Assurance Corpn (1932) 147 LT 217, [1932] All ER Rep 810, 48 TLR 441, 76 SolJo415, 18 Asp MLC 309,43 LIL Rep 161. Potoi Chau, The. See Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd, The Potoi Chau = Potter v Campbell (1867) 2 LJNC 223, 17 LT 474n, 16 WR 399, 401, 3 Mar LC 29n . 415 Oe Potter v Rankin (1868) LR 3 CP 562; revsd. (1870) LR 5 CP 341, Ex Ch; affd. sub nom. Rankin v Potter (1873) LR 6 HL 83, 42tee 169, 29 LT 142, 22 WR 1, 2 ee MLC65, Root : Hin. onne2o ; : : : ; ‘ : Powell v Gudgeon (1816) 5M & S 431 2157324 : : ; : 5 3 v Innes (1843) 11 M & W 10, 12 LJ Ex 163 Powles e l 20 ‘ ; Preston v Greenwood (1784) 4 Doug KB 28 2288 Price v Livingstone (1882) 9 QBD 679, 53 LJQB 118, 47 LT 629, 5 Ne MLC 13,GA Price v Maritime Insurance Co (1900) [1901] 2 KB 412, 70 LJKB 780, 85 LT 101, 49 WR 645, 17 TLR 559, 45 SolJo575, 9 Asp MLC 213, 6 Com Cas 168, CA : : , 9 xliv Table of cases PAGE TS a : : Price v Noble (1811) 4 Taunt 123. 58 cle 5 Price & Co v AI Ships’ Small Damage tence aceon (1889) 22 QBD 580, . ; 269, 61 LT 278, 37 WR 566, 5 TLR 356, 6 Asp MLC 435, CA Princess Charlotte, The (1863) Brown & Lush 75, 33 LJPM & A 188 416 sey] cme ‘ Probatina Shipping Co Ltd v Sun Insurance Office Ltd [1974] 2 All ER 478, [1973] 2 liloyd’s Rep 520; on appeal [1974] QB 635, [1974] 2 All ER 478, [1974] 2 WLR 666, 118 SolJo 09857399 . 331, [1974] 1 Lloyd’s Rep 369,CA Property Insurance Co Ltd v National Protector Iysenace oF Ltd (1913) 108 LE 104, 57 Sol Jo 284, 12 Asp MLC 287, 18 Com Cas 119 . , » 469,406 Proudfoot v Montefiore (1867) LR 2QB511,8B&S 510, 36 LJQB 225, 16 LT 585, 15 WR 920, 2 Mar LC 512 : . 41, 44,55 Provincial Insurance Co of Canada v the (1874) LR 6 PC 244, 43 LJPC 49, 31 LP 1425.22 WR 929, 2 Asp MLC 538, PC. : 17, 282, 285, 311, 326, 390 Prudent Tankers Ltd SA v Dominion Trewrence Co Ltd, The Caihbess Sea [1980] 1 Lloyd’s Rep 338 : ‘ Pyman v Marten (1906) 24 TLR 10, 13 Gor Cas 64,CA : : 3 5 ; 114, 160, 250 4 383 Q Quebec Marine Insurance Co v Commercial Bank of Canada (1870) LR 3 PC 234, 7 Moo PCCNS 1, 39 LJPC 53, 22 LT 559, 18 WR 769, 3 Mar LC 414, PC. : 301, 302, 311 R R v Arnaud (1846) 9 QB 806, 16 LJQB 50, 8 LTOS 212, 10JP 821, oe pe) Raine v Bell ae 9 East 195 ‘ : MEP a) PUSS Ralli v Janson (1856) 6 E & B 422, sub nom. Janson (onamon Vv Ralli 25 LJQB 300, 27 LTOS 139, 2 Jur NS 566, 4 WR 568, Ex Ch F 431 Ralli v Universal Marine Insurance Co (1862) 4 De GF & J i 31 lJCh 313, 6 a 34, wee 8 Jur NS 495, 10 WR 278, 327, 1 Mar LC 194,197 Randal v Cockran (1748) 1 VesSen98 . : weRO2 _. ; nO" Rankin v Potter (1873) LR 6 HL 83, 42 LJCP 169, 29 LT 142, 22 WR Ik,2 Asp MLC 65, HL : . 348, 353, 356, 381, 383 Renkin Vv Port (1873). See Potter Vv Rankin (1868) (1870) Ratcliffe v Shoolbred (1780) | Park’s Marine Insce 8th ed 413 Rayner v Godmond (1821) 5 B & Ald 225 : ; F : Hg . 411 Rayner v Preston (1881) 18 Ch D 1, 50 LJ Ch 472, 44 UT 787, 45 yp 829, 29 WR 047, CASES : 321 Reardon Smith Lines Ltd VvBlack Ses and Baltic Geieral legevance Co Ltd, The indian City [1939] AC 562, [1939] 3 All ER 444, 108 LJKB 692, 161 LT 79, 55 TLR 929, 83 SolJo 796, 19 Asp MLC 311,45 ComCas1,HL . 326 Red Sea, The [1895] P 293, 64 LJP 89, 73 LT 462, 8 ep MLC 102, mm R 801; on appeal [1896] P 20, 65 LJP 9, 73 LT 462, 44 WR 306, 12 TLR 40, 40 Sol Je64, 8 Asp MLC 102, CA : : ; - 21, 395, 396 Redman v Wilson (1845) 14M & W476, 14 LJ Bx 333, eur 714. 3 . 144,231 Redmond v Smith (1844) 7 Man & G 457, 2 Dow & L 280, 8 Scott NR 250, 13 LJCP 159, 3 LTOS 162, 8 Jur 711 : 308 Reed (A E) & Co v Page, Son & East Ltd [1927] 1KB 743, 96 WKB 390, 137 LT Ts 43 TLR 272, 17 Asp MLC 231, 32 Com Cas 243, CA , ‘ : eco Reid v Allan (1849) 4 Exch 326, 19 LJ Ex 39, 7 LT 75, 13 Jur 1082. j : F 2 eLO5 Reid v Darby (1808) 10 East 143. . , : ¢ ie 299) Reid v Standard Marine Assurance Co Ltd (1886) 2 TLR 807 : Reimer v Ringrose (1851) 6 Exch 263, 20 LJ Ex 175,17 LTOS 18 . P ; d . . Reischer v Borwick [1894] 2 OB 548, 63 LJQB 753, 71 LT 238, 10 TLR 568, 7 hee MLC 493,9R558,CA . 349 374 228 Reliance Marine Insurance Co.VvBader [1913] l KB 265, 81 LJKB 870, 106 LT 936, 28 TLR 469, 12 Asp MLC 223, 17 Com Cas 227, CA ‘ Renpor, The (1883) 8 PD 115, 52 LJP 49; 48 LT 887, 31 WR 640, 5Asp MLC 98, CA . 5 467 443 Table of cases xlv PAGE Renton (G H) & Co Ltd v Black Sea and Baltic General Insurance Co Ltd [1941] 1 KB 206, [1941] 1 All ER 149, 110 LJKB 329, 164 LT 190, 57 TLR 133, 85 SolJo 178, 46 Com Cas 113, 19 Asp MLC 396, 68 LIL Rep71 . : 8,125 Renton (G H) & Co Ltd v Cornhill Insurance Co Ltd (1933) 149 ET 280, [1933] All ER Rep 577, 49 TLR 414, 18 Asp MLC 407, 46 LI L Rep 14 : 430 Rhesa Shaq Co SA v Edmunds, The Popi Mmeer 2 Lloyd’ 3 235; vu (1985) Financial Times 22 May . : me lA0; 250) Rhind v Wilkinson (1810) 2 Taunt 237 4 : : F : : ‘ ean Rich v Parker (1798) 7 Term Rep 705, 2 Esp 615 3 : sont Rickards v Forestal Land, Timber and Rlys Co Ltd. See Forestal ey Tiniber! and Rlys Co Ltd v Rickards Les} PAST Rickards v Murdock (1830) 10 B & C 527, L & Welsb 132, 5 Man & Ry KB 418, 8 LJOSKB | (ae : .57, 79 Rickman v Cantdits (1833) 5 B & Ad 651, 2 Nev. & MKB 562, 3 LJKB 28 : i MBS Ridsdale v Newnham (1814) 3M &S 456 Rivaz v Gerussi (1880) 6 QBD 222, 50 LJOB 176, 44 LT 79, 4 Asp MLC 377, CA Robertson v Clarke (1824) | Bing 445, 8 Moore CP 622, 2 ee ALOE We : Robertson v Ewer (1786) 1 Term Rep 127 : : : ; Robertson v French (1803) 4 East 130 ; ‘ A ‘ i : j chef Meat 283 169569293 3 eG we elO48492 , 33, 323 Robertson v Marjoribanks (1819) 2Stark 573. Robertson v Money (1824)Ry& M75. ‘ . Robertson v Petros j : : 3 : a 5 8 ING) M Nomikos Ltd [1939] AC 371 , [1939] 2 AllER 723, 108 LJKB 433, 160 LT 542, 55 TLR 779, 83 SolJo 583, 19 Asp MLC 296, 44 Com Cas 303, sub nom. Petros M Nomikos Ltd v Robertson 64 LI L Rep 45, HL . : : . 7 203,008 Robinson v Touray (1811)3Camp158_.. : ad Roddick v Indemnity Mutual Marine Insurance Co [1895] 2 QB 380, 64 LJQB 1335 72 IUae Ys 860, 44 WR 27, 11 TLR 480, 39 SolJo 620, 8 Asp MLC 24, 14R516,CA . 107, 288, 291 Rodocanachi v Milburn (1886) 18 OBD 67, 56 LJQB 202, 56 LT 594, 35 WR 241, 3 TLR 115, 6 Asp MLC 100, CA 21 Rodoconachi v Elliott (1874) LR 9 CP 518, 43 LJCP 255, 31 LT 239, 2 IS MLC 399, Ex 2 . 8, 368 Roelandts v Blarcon (1854) 9 Exch 444, 2 CLR 995, 23 LJ Ex 169, ‘92 LTOS 289 Ch : : oe REY Rohl v Parr (1796) 1 Esp 445 . : el es : Rosa v Insurance Co of the State of Pennsylvania, The Belle ofPortugal 1970)2Lloyd’s Rep 386 ; Roscow v Corson (1819) 8 came 684 : : 113, 151, 161 . 5 son HOS Rosetto v Gurney (1851) 11 CB 176, 20 LJCP 257, 17 LTOS 242, 15 Jur 1777 : =) 9045574 Ross v Hunter (1790) 4 Term Rep 33 ; 5 162, 167, 169 Roura and Forgas v Townend [1919] 1 KB 189, ‘f1918- 19] AllER ae 341, 88ee 393) 120 LT 116, 35 TLR 88, 14 Asp MLC 397, 24 Com Cas 71 : ne 3705409 Routh v Thompson (1809) 11 East428 : ‘ ; : : a AS Routh v Thompson (1811) 13 East 274. 6 e 20 Roux v Salvador (1835) 3 Bing NC 266, 2 Hodg 209,4 Scott 1,7LU ‘gy 398 : 348,350, 382, 388 Rowland and Marwood SS Co Ltd v Maritime Insurance Co Ltd (1901) 17 TLR 516, 6 Com Cas 160 . 4 HS Royal Exchange REN aes v Mw Geicey (1850). See M’Swiney Vv Royal Pachanee Acurence (1849) Royal Exchange Assurance Co Ltd v Compania Naviera Santi SA (1962) 106 Sol Jo 312, [1962] 1 Lloyd’s Rep 410 : 241 Royal Exchange Shipping Co v Dixon (1886) 12 App Cas ie 56 LJQB 266, 56 LT 206, 35 WR 461, 3 TLR 172,6 Asp MLC 92,HL 154 Ruabon SS Co v London Assurance [1900] AC 6, [1895-9] AllER Rep 677, 69 LJQB 86, 81 LT 585, 48 WR 225, 16 TLR 90, 44 SolJo 116, 9 Asp MLC 2, 5 Com Cas 71, HL . 416, 421 Rudolph (M J) Corpn v Lumber Mutual Fire Insurance Co (Luria International, Third Parties), The Cape Borer [1975] 2 Lloyd’s Rep 108 ‘ 218 Russell v Niemann (1864) 17 CBNS 163, 5 New Rep 190, 34 LJCP 10, 10 LT 786, 13 WR 93, 2 Mar LC 72 : ; melo) Russell v Provincial Insurance Co Ltd [1959] 2 Eloy Rep 275 : : : 270, 272, 300 ny xlvi Table of cases PAGE SOS = : Russell vy Thornton (1859) 4H & N 788. Russell v Thornton (1860) 6 H & N 140, 30 LJ Ex 69, 2ale 574, eqs NS 1080, 8 WR 615 Rasise Bank for Fema Tad v Baca: isance Co [1918] 2 KB 123, 87 LJKB 872, 118 LT 645, 34 TLR 383, 14 Asp MLC 316, 23 Com Cas 325; affd. rea 1 KB 39, 88 LJKB 262, 386 . 209, 119 LT 733, 35 TLR 42, 63 SolJo40, 14 Asp MLC 362, CA Ruys v Royal Exchange Assurance Corpn pe: 2 se 135, 66Tales 534, a9 LT 23, 1S"1cR 444, 8 Asp MLC 294, 2 Com Cas 201 . 376 21 S Sadler v Dixon (1841). See Dixon v Sadler (1839) 124; 319 : ; : Safadi v Western Assurance Co (1933) 46 LI L Rep 140 St Margaret’s Trust Ltd v Navigators and General Insurance Co Ltd (1949) 82 LI L Rep . 48, 247, 347, 445 ; : : 3 e ToD 46, 326 i ¢ ‘ Salvador v Hops (1765) 3 Baer 1707 Samuel v Royal Exchange Assurance Co (1828) 8 B& C 1G), 6 LJOSKB 315 ‘ 119, 120, 136 Samuel (P) & Co Ltd v Dumas [1923] 1 KB 592, 92 LJKB 465, 128 LT 706, 39 TLR 154, 67 SolJo336, CA; affd. [1924] AC 431, [1924] All ER Rep 66, 93 LJKB 415, 130 LT 771, 40 TLR 375, 68 SolJo 439, 16 Asp MLC 305, 29 Com Cas 239, 17 LI L Rep 47, 67, 217, Isles S : 22,23, 145, 227; 232) 235, 244, 290; 31:25 318 Sanderson v Bushes (1814) 4 Camp 54n P , Sanderson v M’Cullom (1819) 4 Moore CP 5 é Sanderson v Symonds (1819) 1 Brod & Bing 426, 4 Mase cP 42 Sarguy v Hobsun. See Sarquy v Hobson : : : : : : : 3 280,286 ane RAH . |278 Sarquy v Hobson (1827) 4 Bing 131, sub nom. Sarguy v Hobsun 1 Y & J 347, 12 Moore CP 474,ExCh . Sasson (E D) & Co Ltd v "Yorkshire ines Rep 129, CA 226 Co Ltd (1923) 14 LI i Rep 167; and 16 LI L ; ae 20 254 Sassoon (E D) & Co v Westerns: Asirance Co [1912] AC 561, T1911 13] AllERae 438, 81 LJCP 231, 106 LT 929, 12 Asp MLC 206, 17 Com Cas 274, PC Saunders v Baring (1876) 34 LT 419, 3 Asp MLC 132 Sawtell v Loudon (1814) 5 Taunt 359, Marsh 99 Schauer v Webster & Co (1929) 35 LIL Rep 31 . Schloss v Stevens (1905) 10 Com Cas 224,CA . . : ; : : , : : ; 5 » ie SAT : é : j : 3 : ; ; , Se sy . 3) ee) AOS 455 398 Schloss Bros v Stevens [1906] 2 KB 665, 75 LJKB 927, 96 En 205, 29 TLR TITAS 10 Asp MLC 331, 11 Com Cas 270, CA : . 8,46,178 Schroder v Thompson (1817) 7 tae 462, 1 Moore cP OS : 5 » , 136 Scindia Steamships (London) Ltd v London Assurance [1937] | KB 639, [1937] 3 All ER 895, 106 LJKB 425, 157 LT 496, 42 Com Cas 121, 19 Asp MLC 86, 56 LI L Rep ISOs. : 5 ats Scott v Coulson [1903] 2 Ch 249, Ue LJ Ch 600, 88 ber 653, 19 TLR ‘440, CA : : 5 WS: Scott v Globe Marine Insurance Co Ltd (1896) 1 Com Cas 370 : j 205,92 Scottish Marine Insurance Co v Turner Wee 4 HL Cas 312n, 21 LTOS 10, 17 Jur 631, 1 WR 537, | Macq 334, HL : O09 DOL Scottish Metropolitan Assurance Co Ltd v Giosm (1924) 4 TLR 35, 20 Ll L Rep 44, Clg: : : . 445 Scottish Metropolitan Merance Co Ltd v Sewart (1923) 39 TLR 407 , : » L270 024 Scottish National Insurance Co Ltd v Poole (1912) 107 LT 687, 29 TLR 16, 57 Sol Jo 45, 12 Asp MLC 266,18 ComCas9_.. : 467 Scottish Shire Line Ltd v London and Provincial Marne and Gerenl Insane Co Ltd [1912] 3 KB 51, 81 LJKB 1066, 107 LT 46, 56 SolJo 551, 12 Asp MLC 253, 17 Com Cas 240°: a 21d) 250 Sea Insurance GxVv Blogz [1898] 2 QB 398, 67 LJQB 757, 78 LY 785, 47 WR AG ka IER: 474, 42 SolJo 590, 8 Asp MLC 412, 3 Com Cas 218, CA , 284 Sea Insurance Co v Hadden (1884) 13 QBD 706, 53 LJQB 252, 50 LT 657, 32 WR 841, 5 Nes MLC 230, CA : ; 1 3955456 Sea Insurance Co ofScotland v Gan (1829) 4 Bli NS 578, 2 Dow & Cl 129, HL 3 eokl6 Seagrave v Union Marine Insurance Co (1866) LR 1 CP 305, Har & Ruth 302, 35 LJCP 172, 14 LT 479, 12 Jur NS 358, 14 WR 690, 2 Mar LC 331 Seaman v Fonereau (1743) 2 Stra 1183 ° . ; : - ‘ ¢ yA: 840) 4l,69, 73, 79 Table of cases Sewell v Royal Exchange Assurance Co (1813) 4 Taunt 856 . Sharp v Gladstone (1805) 7 East 24,3 Smith KB39 _. ; Shawe v Felton (1801) 2East 109. 5 ; } : ; : : x\vii ; 5 PAGE » $309 S96 ; 98, 121 Shelbourne & Co v Law Investment and ounce Corpn (19982 Qp626, 67 LJQB 944, 79 LT 278, 8 Asp MLC 445, 3 Com Cas 304. 5 226, 228, 421 Sheriff v Potts (1803) 5 Esp 96 ‘ : : ; : : : : olay? Shirley v Wilkinson (1781) 3 Doug KB are . cin vel _ Shoolbred v Nutt (1782) 1 Park’s Marine Insce 8th ed 493, 1 Marshall on Givers ince 3rd ed 474 ; 5 ? 53 Shooting Star, The, ip Ree VvCoco See Hennon Vv‘Clopen Sibbald v Hill (1814) 2 Dow 263, 1 Moo PCC 133n, 49 Lords Journals 1106, HL fs 73 Silver Dolphin Products Ltd v Parcels and General NPT SRES Association Ltd [Be 2 Lloyd’s Rep 404. . Simeon v Bazett (1813)2M&S$94 ; : 117 . . 44 Simon, Israel & Co v Sedgewick [1893] 1 QB 303, 62 LJQB163, 67 Wan 785, 4l WR 163, 9 TLR 104, 7 Asp MLC 245,4R128,CA 117 Simond v Boydell (1779) 1 Doug KB 268. : ; : ; : : 5 Simonds v Hodgson (1832) 3 B & Ad 50, 1 LJKB 5 3 ; Simons (trading as Acme Credit Services) v Gale [1958] 2 All ER 504, [1958]i WLR 678, 102 SolJo 452, [1958] 2 Lloyd’sRep1,PC . Simpson v Thomson (1877) 3 App Cas 279, 38 LT 1, 3 ie MLC 567, HL Sipowicz v Wimble, The Green Lion [1974] 1 Lloyd's Rep 593 5 5 . SiO 108 293 456, 458 147,159 Slattery v Mance [1962] 1 OB 676, [1962] 1 All ER 525, [1962] 2 WLR 569, 106 SolJo 113, [1962] 1 Lloyd’s Rep 60 . 3 62, 77 Sleigh v Tyser [1900] 2 QB 333, 69 1JQB626, 82 7. 804, 16 TLR 404, 9 ae MLC 97, 5 Com Cas 271 5 . 4,302 3110433 Small v Gibson (1849) 16 QB iat Ex Ch; aid. a nom. Gibson Vv / Small (1853) 4 HL Cas 353, 21 LTOS 240, 17 Jur 1131, 1 CLR 363, HL . : 282 Small v United Kingdom Marine Mutual Insurance Association [1897] 2 QB 49,66 LJQB 412, 76 LT 326, 13 TLR 290, 8 Asp MLC 255, 2 Com Cas 133; affd. [1897] 2 OB 311, 66 LJQB 736, 76 LT 828, 46 WR 24, 13 TLR 514, 8 Asp MLC 293, 2 Com Cas 267, . Be OS, 220 CA Smith v Arcdent nan Co (1870) LR 5 Exch 302, 39 LJEx 21, 29 LT 861, 18 WR OTe. Smith v Cologan (1788) 2Teri Ren 188n_ Smith v Lascelles (1788) 2 Term Rep 187 . Smith v Scott (1811) 4Taunt126 . 5 : 5 j , , : 5 : : ; : : =. 3 : : e Bl Hl ats) . 144 Smith Hill & Co v Pyman Bell & Co [1891] 1 QB742, 60 0 1JQB621,64 LT 436, 39 WR 466, 7 TLR 417, 7 Asp MLC7,CA . : : on Snook v Davidson (1809) 2 Camp 218 ; Soares v Thornton (1817) 7 Taunt 627, 1 Moore CP 373 : : . ; : : : : Pe 328 in| 5 ee) LOS G7, Société Belge Des Betons SA v London and Lancashire Insurance Co Ltd [1938] 2 All ER 305, 158 LT 352, 82 SolJo 316,60 LIL Rep 225 . : a 09 Société d’Avances Commerciales (SA Egyptienne) v Merchants’ Maine Tnsuraaice Co (1924) 20 LI L Rep 74 : : 23751238 Socony Mobil Oil Co Inc, Mobil Oil Co Ltd oad Mobil Oil AG:Vv West of England Ship Owners Mutual Insurance Association Hi Rep 408 eaeglen Ltd, The Padre Island bein 2 ceva) : Solly v Whitmore (1821) 5B & Ald 45 ; : : : 7 4a79 3) DEI Soussanis v Liverpool Marine Insurance Co Ltd (1935) 51 LI L Rep 1,CA : d 7398 South British Fire and Marine Insurance Co of New Zealand v Da Costa [1906] 1 KB 456, 75 LJKB 276, 94 LT 435, 54 WR 420, 22 TLR 305, 50 Sol Jo 292, 10 Asp MLC 227, 11 Com Cas 81 . d = 3075467. Soya GmbH Mainz Kornpanditeesllschat Vv White [1982] Ligva’s Bes 136, [1982] Com LR 22, CA; on appeal [1983] 1 Lloyd’s Rep 122, 133 a 64, Meee Com LR 46, HL . 49, 195, 255 Spalding VvCracker (1897) 13 TLR 396,M4Com Cas 189 ; s Sparkes v Marshall (1836) 2 Bing NC 761, 2 Hodg 44, 3 Scott 172, 5LJCP 286 . Spathari, The. See Demetriades v Northern Assurance Co, The Spathari Seale ne : 28, 320 xlviii Table of cases PAGE Spence v Union Marine Insurance Co Ltd (1868) LR 3 CP 427, 37 ck 169, 18 LT 632, 16 431430 Sep ; . WR 1010, 3 Mar LC 82 . Spitta vyWoodman (1810) 2 Taunt 416, 16 East 188n ete : : aes) Pa : Stainback v Fenning (1851) 11 CB 51, 20 LJCP 226, 17 LTOS 255, 15 Jur 1082. Stainbank v Shepard (or Shepherd) (1853) 13 CB 418, | CLR 609, 22 = Ex 341, 22 LTOS geod . 158, 17 Jur 1032, 1 WR505,ExCh 162, 166 zp 5 Stamma v Brown (1742) 2 Stra 1173 Standard Oil Co of New Jersey v United ple The john Wordiacted [1951] 2 Lloyd’s BEE 36 : Stanley v Western Tastee Co (1868) LR 3Exch 7A, 37 LJ Ex 1S W7 LT 513; 16 WR 369 199 143 Steani, Tanker Padre isinhd ie Ata Pillay Bank a Trust Co Vv [Loudon ecnvanee Guildhall Insurance Co et al, The Padre Island [1971] 2 Lloyd’s Rep 431. 5 162, 244 Stearns v Village Main Reef Gold ne Co Ltd ae 21 TLR 236, 10 Com Cas 89, CA 456 Steel v heed (1810) 3 Tat 285 : Penis) Steel v State Line SS Co (1877) 3 App Cas 72, [1874 80] All ER Rep 145, 37 LT 333, 3 Asp MLC 516, HL : 297) Steel Wing Co Ltd, Re [1921] 1 Ch 349, [1920] AllER Rep 292, 90 LJ Ch 116, “124 dit 664, 65 SolJo 240, [1920] B& CR160_—«z 316 Steinman & Co v Angier Line [1891] 1 QB 619, 60 LJQB 425, 64 LE 613, 39 WR “392, 7 TLR 398, 7 Asp MLC 46,CA . 152 Stephens v Australasian Insurance Co (1872) LR 8 cP 18, 422 JCP 1 27 ae. 585, 2 WR : : SE Ps Stevenson v Snow (1761) 3 Burr 1237, 1 Wm Bl 318 228, 1 Asp MLC 458 i ; : : : : : c 85, 323 Stewart v Bell (1821) 5 B & Ald 238 ; ; : 2 : é 46, 326 : Stewart v Dunlop (1785) 4 Bro Parl Cas 483, HL : eat Stewart v Greenock Marine Insurance Co (1848) 2 HL Cas 159, Aornom. The faurek Stewart v Greenock Marine Insurance Co 2 LT 809, HL . : Bh eek Aeks: Stewart v Merchants’ Marine Insurance Co (1885) 16 nese619, 55TIQB 81, 53 LT 892, 34 WR 208, 2 TLR 156, 5 Asp MLC 506,CA . : 2 we LOZ Aa : : oe 9lO525526 Stitt v Wardell (1797) 2 Esp 610 ; Stockdale v Dunlop (1840) 6 M & W 224, 9 LJ Ex 83, ZL 804, ie 681 Stirling v Vaughan (1809) 11 East 619,2Camp225_. : : ‘ 3 ; 3 va aie WiS2 aT) Stolos Compania SA v Ajax Insurance Co Ltd, The Admiral C [1981] 1 Lloyd’s Rep 9, [1980] Com LR 4, CA : 325 Stone v Marine Insurance Co Ocean Ltd of Gathenbare (1876) l Ex D 81, 45 LJQB 361, 34 LT 490, 24 WR 554, 3 Asp MLC 152 < E . 85, 119, 120 Strass v Spillers and Bakers Ltd [1911] 2 KB 759, 80 LJKB 1218, 104 LT 284, 11 Asp MLC 590, 16 Com Cas 166 : Street v Royal Exchange Assurance (1914) 111 LT 235, 30 TLR 495, 12 Asp MLC 496, 19 321 Com Cas 339,CA . ‘ 471 Stribley v Imperial Marine Eecnewnee Co (1876) 1 QBD 507, 45 LJQB 396, 34 LT 281, 24 WR 701, 3 Asp MLC 134 b 5 41, 57 Stringer v Buglish and Scottish Marine Insurance Co (1870) LR 5 QB 599, 10 B & $770, 39 LJQB 214, 22 LT 802, 18 WR 1201, 3 Mar LC 440, ExCh : 3 Sunderland SS Co and North of England Iron SS Insurance Association, Re (1894) 346, 368, 379 11 TLR 106, 14R 196,CA. ‘ , suelo Sutherland v Pratt (1843) 11 M & Ww296, 2 Dowl NS 813, 12 i Ex 239% 7Jur 261 : AY eo Swan and Cleland’s Graving Dock and Slipway Co v Maritime Insurance Co and Croshaw [1907] | KB 116, 76cee 160, 96 LT 839, 23 TLR 101, 12 Com Cas 73, 10 fp MLC 450° : : 320 T Tabbs v Benedelack (1801) 3 Bos & P 207n, 4 Esp 108. Tannenbaum & Co v Heath [1908] 1 KB 1032, 77 noe 634, 99 LT 237, 24 TLR 450, 52 286 SolJo 375, 13 Com Cas 264, CA Tanner v Bennett (1825) Ry & M 182 Tasker v Scott (1815) 6 Taunt 234. 398 PE 25) 5 ; : : : 3 : : : é : 6 Tate v Hyslop (1885) 15 QBD 368, [1881-5] All ER Rep875, oF 1JQB 992, 53 vr. 581, 1 TLR 532, 5 Asp MLC 487, CA : 56 Table of cases xlix PAGE Tatham v Hodgson (1796) 6 Term Rep 656 ; 4 5 Pes) Tatham, Bromage & Co v Burr, The Engineer ee AC 382, 67 WP61, 78 LT 473, 46 WR 530, 14 TLR 369, 8 Asp MLC 400, HL ‘ Tatjana, The. See Lindsay v Klein, The Tatjana Taylor v Briggs (1827) 2C & P525,Mood& M28. Taylor v Dunbar (1869) LR 4 CP 206, 38 LJCP 178, 17 WR 382 5, : : 5 ‘ : Oe) ; - 108 143, 153, 228 Taylor v Liverpool and Great Western Steam Co (1874) LR 9 QB 546, 43 LJQB 205, 30 LT 714, 22 WR 752, 2 Asp MLC 275 ; 152 Teneria Moderna Franco Espanola v NZ patience Co [1924] 1 KB 7iSy,93 LJKB 169, 130 LT 139, 16 Asp MLC 236,CA . ; : a0) 98975401 Tenneco Oil Co v Tug Tony Coastal Towing Gatos [1972] 1 Lioye’s Rep. Daas ; . Thames and Mersey Marine Insurance Co v British and’Chilian SS Co [1916] 1 KB 30, [1914-15] All ER Rep 239, 85 LJKB 384, 114 LT 34, 32 TLR 89, 13 Asp MLC 221, 21 Com Cas 150,CA . Thames and Mersey Marine Teun 456 460 Go.Vv Guotord Rs Co [191 1 AC 529, 80 LJPC 146, 105 LT 312, 27 TLR 518, 55 SolJo 631, 12 Asp MLC 49, 16 Com Cas 270,HL_ . DON09; 64 Thames and Mersey Marine Insurance Co v Pitts, Son and King [1893] 1 QB 476, 68 LT 524, 41 WR 346, 37 SolJo 216, 7 Asp MLC 302, 5 R 168, DC 5 se 20294595 Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser & Co (1887) 12 App Cas 484, [1886-90] All ER Rep 241, 56 LJQB 626, 57 LT 695, 36 WR 337, 3 TLR 764, 6 Asp MLC 200, HL ; 145 Thames and Mersey Marine ijasurance Co Ltd v Von ane & Gs 1905 (91 cal 2KB 48n, 86 LJKB 840n, 116 LT 368n, 14 Asp MLC 14n, HL . Thelluson v Fletcher (1793) 1 Esp 73 : ; : Thellusson v Fergusson (1780) 1 Doug KB 360. i Thellusson v Staples (circa 1780) cited in 1 Doug 366n Theodorou v Chester [1951] 1 Lloyd’s Rep 204 . : 3 3 3 F : é 5 : : 3 5 NO auly : : : ; ; : : . 385 5 130 feos Salle) Thin v Richards & Co [1892] 2 OB 141, 62 LJQB 39, 66 LT 584,40 WR 617, 8 TLR 571, 36 SolJo 501, 7 Asp MLC 165, CA : 301 Thomas v Tine and Wear SS Freight Insurance Reeocation [191 7\ IKB 938, 86 LJKB 1037, 117 LT 55, 14 Asp MLC 87, 22 Com Cas 239 ; 303 Thompson v Gillespy (1855) 5 E & B 209, 3 CLR 1368, 24 LJQB 340, 25 LTOS 174, far NS 779, 3 WR 505 : 283 Thompson v Hopper (1856) 6 E & B 172, 25 LJQB 240, 26 LTOS 308, 2 Jur NS 608, ‘4 WR 3607 ~ 145 Thompson v Hopper (1858) EB & E 1038, 27 LJQB 441, 32 LTOS 38, 5JurNS 935 6 WR 857,ExCh . ; ce O232. Thompson v Rowcroft (1803) 4 East 34 : ; ; 5 3 : ‘ : 5 8]5) Thompson v Taylor (1795) 6 Term Rep 478 : : : : F Thompson v Whitmore (1810) 3 Taunt 227, [1843-60] All ER Rep 698 . Thornley v Hebson (1819) : 2B & Ald 513 . : : : : ; : 5 ge Se SOROS 2 : Anca) Thornton v Knight (1849) 16 Sim 509 ; : a Thrunscoe, The [1897] P 301, 66 LJP 172, 77 iT 407, 46 WR 175, 13 TLR 566 8 Asp MLC 313, DC : PaIS Tidswell v Ankerstein (1792) Poe 151 25 : ; 5 ; F : ; 143 Tierney v Etherington (1743) cited in 1 Burr 348 é ; 133, 395, 328 Tobin v Harford (1864) 17 CBNS 528, 4 New Rep 373, 34 Igor37, 3 10 LT 817, 10 Jur NS 850, 12 WR 1062, 2 Mar LC 34, Ex Ch : : OO Todd v Reid (1821)4B& Ald 210 . : F ‘ 5 : : ‘ : 5 ey Todd v Ritchie (1816) 1 Stark 240. 3 ; ; : ; ; : . a LO Toulmin v Anderson (1808) 1 Taunt 227 . Towse v Henderson (1850) 4 Exch 890, 19 LJ Ex 163, 14 LTOS 400 : 3 é ; ; : =~. ay 167 208 Traders and General Insurance Association Ltd, Re, ex p Continental and Overseas Trading Co [1924] 2 Ch 187, 93 LJ Ch 464, 131 LT 626, 40 TLR 561, 68 SolJo 615, 16 Asp MLC 384, 29 Com Cas 302, 18 LI L Rep 450 Traders and General Insurance Association ‘ : 123, 124 Ltd v Bankers and Geleish eeu ance Co Ltd 2 3. 38 TLR 94,9 LIL Rep (1921) Trident, The (1939). See Hall Bros SS Co Ltd v Young: The Trident E ; : . 194 1 Table of cases PAGE Trim Joint District School Board of Management v Kelly [1914] AC 667, 83 LJPC 220, 111 LT 305, 30 TLR 452, 58 SolJo 493, 7 BWCC 274, HL . 145 Trinder, Anderson & Co v Thames and Mersey Marine Tneimantes Co [1898] 2 QB 114, 67 LJQB 666, 78 LT 485, 46 WR 561, 14 TLR 386, 8 Asp MLC 373, 3 Com Cas 123, CA 232, 383, 450 Tropactoros The. See Gone The Tropaioforos Naver Santi SA VvIndenmnicy Marine Assurance Co Ltd, Turnbull v Janson (1877) 36 LT 635, 3 Asp MLC 433,CA 207 Turnbull, Martin & Co v Hull Underwriters’ Dcaaon [1900] 2 QB 402, [1900- 3] AllER Rep 85, 69 LJQB 588, 82 LT 818, 16 TLR 359, 9 a MLC 93, 5 Com Cas 248 . = 230, 262 Twemlow v Oswin (1809) 2 Camp 85 : Tyson v Gurney (1789) 3 Term Rep477_ . : : : : Hees F , : 5 . : : : : 116, 326 286 U Uhde v Walters (1811) 3Camp 16. Undaunted, The (1860) Lush 90, 29 LJPM & A 6 2 LT 520 : . 443 Union Castle Mail SS Co Ltd v United Kingdom Mutual War Risks Recents Ltd [1958] 1 QB 380, [1958] 1 All ER 431, [1958] 2 WLR 274, 102 Sol Jo 125, [1958] 1 Lloyd’s Rep 58 : 220 Union Insurance Society of Canton Ltd Vv Geos Wills & Co [1916] AC 281, 85 LJPC 82, 114 LT 245, 32 TLR 196, 13 Asp MLC 233, 21 Com Cas 169,PC ; 93, 282 United Kingdom Mutual SS Assurance Associtaion Ltd v Boulton (1898) 3 Com Cas SOO) S83 595399 United Mills Aucacie: Ltd Vv R E Harvey Baey & Co [1952] 1 All ER 295n, [1952] 1 TLR 149, 96 Sol Jo 121, [1951] 2 Lloyd’s Rep 631 : 332 United Scottish Insurance Co Ltd v British Fishing Vessels Mutual Was Risks Nsbelation Ltd, The Braconbush (1944) 78 LI L Rep 70 : F ~ + 209; 349 United Shipping Co Ltd v Assicurazioni Generali (1929) 34 LI L Rep 323, CAR: ez oll United States Shipping Co v Empress Assurance Corpn [1907] 1 KB 259, 76 LJKB 225, 23 TLR 137, 12 Com Cas 142; affd. bat Cas90,CA . . Usher v Noble (1810) 12East 639 : 1 KB 115, 77 ace 120, 24 TLR 45, 13 Com : ; 20, 428 : 99, 435 Uzielli v Boston Marine Insurance Co (1884)H) US} QBD |lI,54 1yQp 142, 52 LT 787,33 WR 293, 1 TLR 49, 5 Asp MLC. 405,CA . 2 3 385, 443, 466 Vv Vacuum Oil Co v Union Insurance Society of Canton Ltd (1926) 32 Com Cas 53, 25 LI L Rep 546, CA ‘ : . 368, 381, 384, 386, 387 Vainqueur José, The. See CVG Sidevursiea del Onnoce SA v London SS Owners’ Mutual Insurance Association Ltd, The Vainqueur José Vainqueur, The. See Northwestern Mutual Life Assurance Co v Linard, The Vainqueur Vallance v Dewar (1808) 1 Camp 503, [1803-13] All ER ae 619 . : : ; 46, 130 Vallejo vWheeler (1774) 1 Cowp 143, Lofft 631 : ; : ; 161, 163, 165 Vandyck v Hewitt (1800) 1 East 96 . : : 5 : F ; : : Stayt Vasso, The. See Bruns v Colocotronis, The Vasso Village Main Reef Gold Mining Co v Stearns (1900) 5 Com Cas 246 Violett v Allnutt (1811) 3 Taunt 419 : : : : BEES e ley Virginia Carolina Chemical Co v Norfolk and North Anerioss ieee Co (1912) 107 LT 320, 28 TLR 513, 56 SolJo 722, 12 Asp MLC 233, 17 Com Cas 277 . 297 Visscherij Maatschappij Nieuw Onderneming v Scottish Metropolitan Aomranee Co Ltd (1922) 38 TLR 458, 27 Com Cas 198, 10 LIL Rep579,CA 4 62, 234 Volkswagenwerk AG and Wolfsburger Transport Gesellschaft mbH v laternacoval Mutual Strike Assurance Co (Bermuda) Ltd [1977] 2 Lloyd’s Rep 503,CA . : Vortigern, The [1899] P 140, [1895-9] All ER Rep 387, 68 LJP 49, 80 LT 382, 47 WR 437, 15 TLR 259, 8 Asp MLC 523, 4 Com Cas 152, CA . Vrondissis v Stevens [1940] 2 KB 90, [1940] 3 All ER 74, 109 LJKB 615, 163 LT Nis56 TLR 713, 84 SolJo515, 45 Com Cas 225, 19 Asp MLC 368, 67 LI L Rep 55 : . 476 301 360 Table of cases \i PAGE WwW Wadsworth Lighterage and Coaling Co Ltd v Sea Insurance Co Ltd (1929) 45 TLR 597, 35 Com Cas 1, 34 LI L Rep 285, CA : Z Wait and James v British and Foreign Marine HOAs Co (1921) 9LIL Rep 518, 552 Wake v Atty (1812) 4 Taunt 493 - 248 x 40%) saa) Walford (Leopold) (London) Ltd v National Benefit Assurance Co Ltd (1921)77 IGG Rep 39 ; : : : : 271 peal Walker (F B) & Sons Inc v Valentine [1970] 2 Wee Rep429 : é ; ne 698294, Wallace v Tellfair (1786) 2 Term Rep 188n s f : : way ae) = =120 Walker VvMaitland (1821) 5B & Ald Hee Waples v Eames (1745) 2 Stra 1243 . : : Warre v Miller (1825) 4 B & C538, 7 Dow & RyKB 1,= tib nom. Miller VvAWarre 4 LJOSKB 8 : : : 5 21, 116 Warwick v Scott (1814) 4 Canp 62 Ferg 280 Waters and Steel v Monarch Fire and Life ee Co (1856) 5 E &B 870, [1843-160] All ER Rep 654, 25 LJQB 102, 26 LTOS 217, 2 Jur NS 375, 4 WR 245 . : 25 Wavertree Sailing Ship Co v Love yee AC 373, 66 ae: 77, 76 LT 576, 13 TLR 419, 8 Asp MLC 276, PC . : Way v Modigliani (1787) 2 Term Rep 30. 3 5 ; : F : ; Sselite}) : e ae E29 Webster v De Tastet (1797) 7 Term Rep 157 : ; : 5 3 5 : se Od Webster v Foster (1795) 1 Esp 407. : ; : 5 ; : . me ao 5 Weir v Aberdeen (1819) 2B & Ald 320. : 5 875, 38,0) Weir & Co v Girvin & Co [1899] 1 QB 193, 68 LJQB 170, 47 WR 365, 79 LY 596, 15 TLR 69, 8 Asp MLC 470, 4 Com Cas 56; affd. [1900] 1 QB 45, 69 ae 168, 81 LT 687, 48 WR 179, 16 TLR 31, 9 Asp MLC 7, 5 Com Cas Weissberg v Lamb (1950) 84 LI L Rep 509 : Wells v Hopwood (1832) 3 B & Ad 20 : 5 40,CA . : : : : 5 2 Beaeall’) . 447 : . 411,412 Wells Fargo Bank International Corpn v London Aas Ship Ouran’ “Mutual Insurance Association Ltd, The John W Hili [1977] 1 Lloyd’s Rep 213. Welsh Girl, The (1906) 22 TLR 475; affd. sub nom. The Commonwealth [1907] P 216, 76 LJP 106, 97 LT 625, 23 TLR 420, 51 SolJo 386, 10 Asp MLC. 538,CA 479 ey) West of England Bank v Canton Insurance Co (1877) 2ExD472 . : : . West of Scotland Ship Owners Mutual Protection and Indemnity Association (udxemboure) v Aifanourios Shipping SA, The Aifanourios [1980] 2 Lloyd’s Rep 403, Ct of Sess . Westbury v Aberdein (1837) 2M & W 267, Murp & H 49, 6 LJ Ex 83, | Jur 201 = 400 476, 477 40555557, Western Assurance Co of Toronto v Poole [1903] 1 KB 376, 72 LJKB 195, 88 LT 362, 9 Asp MLC 390, 8 Com Cas 108 : : . 102, 324, 465, 466 Westport Coal Co v McPhail [1898] 2 QB 130, 67 LJQB 674, 78 LT 490, 46 WR 566, 14 TLR 388, 8 Asp MLC 378, 3 Com Cas 140,CA : 164, 231 Westwood v Bell (1815) 4 Camp 349, Holt NP 122 P : .- 335 Wharton (J) (Shipping) Ltd v Mortleman [1941] 2 KB 283, posi]2 All ER 261, 111 LJKB 321, 165 LT 342, 57 TLR 514, 46 Com Cas 244, CA : j 7 202 Whiting v New Zealand Insurance Co Ltd (1932) 44 Ll L Rep 179 é ; Be PHYA) Whitwell v Harrison (1848) 2 Exch 127, 18 LJ Ex465,7LT 75. : 6 5 Wilkinson v Hyde (1858) 3 CBNS 30, 27 LJCP 116, 7 LT 442, 4 Jur NS 482 : . 108, 431 11049) Williams v Atlantic Assurance Co Ltd [1933] 1 KB 81, [1932] All ER Rep 32, 102 LJKB 241, 148 LT 313, 37 Com Cas 304, 18 Asp MLC 334, 43 LI L Rep 177, CA Williams v East India Co (1802) 3 East 192 Williams v North China Insurance Co a Williams v Shee (1813) 3Camp 469 : . 22, 58, 75, 99, 315, 316, 320 : jee 1 CPD 757, 35 LT 884, 3 AspMLC 342, ‘CA : 5 8B aed 2133 Williams & Co v Canton Insurance Office Ltd [1901] AC 462, 70 LJKB 962, 85 LT 317, 17 TLR 696, 9 Asp MLC 247, 6 Com Case 256, HL . 228 Williams & Co v Canton Insurance Office Ltd (1901). See Brankelow SS Co Vv Cuaron Insurance Office (1899) Williamson v Innes (1831) 8 Bing 81n, 1 Mood & R 88 ; 115 Willis & Co v Baddeley ee 2 a 324, 61 alos 769, 67 LT 206,40 WR 577, 36 Sol Jo 592, CA . 401 lii Table of cases PAGE Willis SS Co Ltd v United Kingdom Mutual War Risks Association Ltd (1947) 80 LI L Rep 398. 3 a206 Willmott v General Accident Fiire ae Life curance Corsa Ltd (1935) 53 Ll L Rep 156 se OSs 76, 305 Wilson v Boag [1956] 2 Lloyd’s Rep 564 . é 91, 128 Wilson v Jones (1867) LR 2 Exch 139, 36 LJ Ex 78, ie ae 669, 15 WR 435, 2 Bar LC 452, Ex Ch. : 27 Wilson v Marryat (1798) 8 Term Rep Silks aff, sab nom.ae ee VveWilson (1799) l Boa & P 430,ExCh . 5 309 Wilson v Rankin (1865) LR 1 OB 162, 6 B &S 208, 35 LJQB87, 13 LT 564, 14 WR 198, 2 Mar LC 287, Ex Ch ; 309 Wilson v Salamandra Assurance Co St Peleahace (1903) 88 LT 96, 19 TLR 229, 9 jes MLC 370, 8 Com Cas 129 ‘ 42 Wilson Bros Bobbin Co Ltd v Green [1917] 1 KB 860, 86 LJKB 713, 116 LT 637, 14 hes MLC 119, 22 Com Cas 185 : 444 Wilson, Holgate & Co Ltd v Lancashire nd Chestire leueaee Cann Ltd (1922) 13 Ll c Rep 486 : . 64, 250, 276 Wilson, Sons & Co v Santho (Cares Oren) (1887) 12 Ape Cas 503, 56 LJP 116, 57 LY 701, 36 WR 353, 3 TLR 766, 6 Asp MLC 207, HL 5 ; . 143, 144, 145, 150 Wolff v Horncastle (1798) 1 Bos& P 316 . : : . 24, 25 Wood v Smith, The City of Cambridge LR 5 PC 451, 43 LJ ae 1 L,30 ee 439, 22 WR 578, 2 Asp MLC 239, PC : 283 Woodley v Michell (1883) 11 QBD 47, o2 LJQB 325,48 iii 599,83]WR 651, 5 Age MLC 71, CAS sa 144 Woodside v Globe Reine Tetanees Co [1896] 1QB 105, 65 LJQB NT, 73 ie 626, 44 WR 187, 12 TLR 97, 40 SolJo 115, 8 Asp MLC 118, 1 Com Cas 237 Wooldridge v Boydell (1778) 1 Doug KB 16 ; Woolmer v Muilman (1763) 1 Wm BI 427, 3 Burr 1419 : : : : 94 ‘ SIG 311 : Wright v Marwood (1881) 7 QBD 62, 29 WR 673, 50pe 643, 45 LT 297, 4 AspMLC 451,CA : 154 Wright v Shiffner (1809) 11 East 515, 2 Cane 247 284 ; Wyllie v Povah (1907) 23 TLR 687, 12 Com Cas 317. Wynnstay SS Co v Board of Trade (1925) 23 LIL Rep 278 ‘ ; 3 ; ; . 3 . : ; : : : : é : : 9 a202 x Xenos v Fox (1869) LR 4 CP 665, 38 LJCP 351, 17 WR 893, Ex Ch 443 Xenos v Wickham Uae LR 2 HL 296, 36 oo 313, 16 LT 800, 16 WR 38, 2 Mar LC 537, intlinn 6 : : : 3 : 5 WATE OSS x Yasin, The [1979] 2 Lloyd’s Rep 45. ; : : 24, 456 Yates v Whyte (1838) 4 Bing NC 272, 1 Arn 85, 5Scott 640, 7LJCP Ties é . 458 Yero Carras (Owners) v London and Scottish Assurance Corpn Ltd (1935) 53 LIL Ren 131 10, 354 Vorkshive Dale SS Co Ltd VvMinister ofWar Uegasports The Cozvold [1942] AC 691, [1942] 2 All ER 6, 111 LJKB 512, 167 LT 349, 58 TLR 263, 86 SolJo 359, 73 LIL Rep 1, HL ; 198, 200, 205 Vertsnice nents Co Ltd VvNisbet Shipping Co Ltd [1962] 2QB 330, [1961] 22 All ER 487, [1961] 2 WLR 1043, 105 SolJo 367, [1961] 2 Lloyd’s Rep 479 ; ‘ 9, 459 Zi Zachariessen (or Zachariassen) v Importers’ and Exporters’ Marine Insurance Co (1924) 40 TLR 297, 29 Com Cas 202,18 LIL Rep98,CA_ . , . 208, 349 Zelo, The. See Pelton SS Co Ltd v North of England Protecting ees Eidonraien Association, The Zelo Zinovia, The. See Michalos (N) & Sons Maritime SA v Prudential Assurance Co Ltd, The : Zinovia PART I The making of the contract : fie es a biak if os CHAPTER 1 Introduction This book deals exclusively with Marine Insurance. Although to a certain extent it is complete in itself, it should be read in conjunction with the first volume in this series,’ especially with regard to such matters as the construction of the policy, the premium, the doctrine of proximate cause, and the rights, duties and authority of insurance agents and brokers. Marine Insurance is a contract of indemnity.” Contracts in the nature of wagering or gaming are void,” and, as in other types of insurance, it is essential for the assured to have an insurable interest in the subject-matter insured.* Where a marine insurance broker is employed to effect the policy, he has certain duties to perform.° The assured must disclose to the insurers all material facts,° and must not make any misrepresentations during the negotiations for the contract.’ He must pay the premium, and the insurer must issue the policy when the premium has been paid or tendered.® Ivamy, General Principles ofInsurance Law (4th Edn, 1979, Supplement 1982). See Chapter 2, post. See Chapter 3, post. See Chapter 4, post. See Chapter 5, post. See Chapter 6, post. See Chapter 7, post. orAI WwW Fk Dn See Chapter 8, post. ny CHAPTER 2 The nature of marine insurance In a contract of marine insurance the insurer undertakes, in consideration of a premium, to indemnify the assured against loss occasioned by perils incident to a marine adventure. The definition given by Roccus is: ‘Assecuratio est contractus quo quis alienae rei periculum in se suscepit, obligando se sub certo pretio ad eam compensandam si ila perierit.’ Section 1 of the Marine Insurance Act 1906? states: ‘A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure.’ Section 3(1) states: ‘Subject to the provisions ofthis Act, every lawful marine adventure may be the subject of a contract of marine insurance.’ Section 3(2) goes on to state that: ‘In particular there is a marine adventure where: a Any ship, goods or other moveables* are exposed to maritime perils. Such property is referred to in this Act as “insurable property”’; b The earning or acquisition of any freight, passage money, commission, profit, or other pecuniary benefit, or the security for any advances, loan, or disbursements, is endangered by the exposure of insurable property to maritime perils; c Any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insurable property, by reason of maritime perils. ‘‘Maritime perils” means the perils consequent on, or incidental to, the navigation ofthe sea, that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like kind, or which may be designated by the policy.’ A CONTRACT OF INDEMNITY A contract of marine insurance is a contract of indemnity, ie the amount recoverable is measured by the extent of the assured’s pecuniary loss.* ' De Assec, not I. 2 References in whatever terms in this Act to ships, vessels, or boats or activities or places connected therewith are extended to include hovercraft or activities or places connected with hovercraft: Hovercraft (Application of Enactments) Order 1972 (SI 1972/971). “Moveables’ means ‘any moveable tangible property, other than the ship, and includes money, valuable securities, and other documents’: Marine Insurance Act 1906, s 90. See, eg Banng Bros G Cov Marine Insurance Co (1894) 10 TLR 276 (postal packet containing stock certificates) ; The Pomeraman [1895] P 349 (live cattle); Sleigh v Tyser [1900] 2 QB 333 (live cattle). For other examples of contracts of indemnity, see lvamy, General Principles. ofInsurance Law (4th edn, 1979) pp 9-10, and Ivamy, Fire and Motor Insurance (4th edn, 1984), pp 8-10. Contract of indemnity 5 In Rickards v Forestal Land, Timber and Rlys Co Ltd? Lord Wright said:° “The object both of the Legislature and of the Courts has been to give effect to the idea of indemnity, which is the basic principle of insurance, and to apply it in the diverse complications of fact and law in respect of which it has to operate. In this way, the law merchant has solved, or sought to solve, the manifold problems which have been presented by insurances of maritime adventures.’ Accordingly, where the assured has no insurable interest’ in the subjectmatter insured, he can recover nothing under the policy, for he has suffered no loss and the insurer is under no duty to indemnify him. Again, where he has over-insured the subject-matter by double insurance, 8 he may, unless the policy otherwise provides, claim payment from the insurers in such order as he may think fit, provided that he is not entitled to receive any sum in excess of the indemnity allowed by the Marine Insurance Act 1906.” Where the policy under which the assured claims is a valued policy,’° he must give credit, as against the valuation, for any sum received by him under any other policy without regard to the actual value of the subject-matter insured. '? Where the policy under which he claims is an unvalued policy,'* he must give credit, as against the full insurable value, for any sum received by him under any other policy.'? Where he receives any sum in excess of the indemnity allowed by the Act of 1906, he is deemed to hold such sum in trust for the insurers, according to their right of contribution amongst themselves.'* Further, by the doctrine of subrogation’® the assured cannot recover more than an indemnity, for if the insurer has paid the assured in respect of a total or partial loss, the insurer is subrogated to any rights which the assured may have against a third party.'® Thus, if the insured vessel is sunk as a result of the negligent navigation of another vessel, and the insurer pays the assured in respect of a total loss, any sum which the assured may recover from the owners of the vessel at fault will belong to the insurer. But under the doctrine of subrogation the insurer is not entitled to any sum in excess of that which he has paid to the assured.*’ Again, where the assured has recovered part of the cost of repairing his vessel, which has collided with another vessel, from the owners of that vessel, he must give credit for that amount in making any claim against his insurers. Thus, in Goole and Hull Steam Towing Co Ltd v Ocean Marine Insurance Co Ltd'® a > [1941] 3 All ER 62, HL. Ibid, at 76. As to ‘insurable interest’, see pp 16-29, post. ‘Double insurance’ is defined by s 32(1) of the Marine Insurance Act 1906 in the following a on terms: ‘Where two or more policies are effected by or on behalf of the assured on the same adventure and interest or any part thereof, and the sums insured exceed the indemnity allowed by this Act, the assured is said to be over-insured by double insurance.’ See further, p 461, post. ° Marine Insurance Act 1906, s 32(2)(a). 10 As to ‘valued policies’, see pp 93-97, post. 11 Marine Insurance Act 1906, s 32(2)(b). 12 As to ‘unvalued policies’, see pp 97-100, post. 13 Marine Insurance Act 1906, s 32(2)(c). 14 Ibid, s 32(2)(d). As to the ‘right of contribution’, see ibid, s 80 and p 461, post. 1S As to ‘subrogation’, see pp 455-460, post. 16 Marine Insurance Act 1906, s 79(1), (2). 17 Yorkshire Insurance Co Ltd v Nisbet Shipping Co Ltd [1962] 2 QB 330, [1961] 2 All ER 487, QBD. 18 (1927) 29 LIL Rep 242, KBD. i 6 The nature of marine insurance vessel was insured under a valued policy for her full value of £4,000. She collided with another vessel and repairs to her cost £5,000. Both vessels were held to blame, and the owners ofthe other vessel paid the assured £2,500. The assured claimed on the policy, contending that the damage suffered was the cost of the repairs less the sum paid by the owners ofthe other vessel, i¢ a total sum of £2,500, and as this sum was less than the sum insured (viz £4,000) they were entitled to recover the whole of it from the insurers. MacKinnonJ, held that this was the wrong basis of calculation. The amount payable under the policy was £4,000 less the amount received by the assured as damages (viz £2,500) ie the assured could only claim £1,500. Although the insurers were primarily liable to pay up to £4,000, the assured had already been paid a sum in respect of damages, and the insurers were entitled by their right of subrogation to be given credit for that sum. His Lordship observed :'° ‘It is quite true in this case that the payment of £4,000 has not fully indemnified the assured for their expenditure of £5,000 on the repairs; they have not put back into their pocket all that they have paid out; but according to the bargain they have made under the policy I think they have been indemnified according to this Act for the whole of the particular average loss which they have sustatned as promised under s 69, and therefore, as they have been, according to this Act, fully indemnified for that particular average loss, the underwriters under s 79 are entitled to all the rights and remedies of the assured in respect of that loss, because they have fully indemnified them for that loss. When the underwriters, in respect of a particular average loss, have paid the assured the indemnity agreed under this provision, when, in particular, they have paid a sum not exceeding the insured amount, in this case £4,000, I think the underwriters are entitled to say: ‘““We have paid the agreed indemnity for the whole of the particular average loss you have sustained, and not merely for a part of it”; they are, therefore, entitled to be subrogated, or to take credit, for the whole sum which the assured may recover from a third party in respect of that particular average damage.’ Another example of the principle that the contract of marine insurance is a contract of indemnity is to be found in the rules relating to the return of premium.*° Thus, eg where the insured goods have never been imperilled because they have never been loaded, the premium is returnable.’ In Goole and Hull Steam Towing Co Ltd v Ocean Marine Insurance Co Ltd? MacKinnon J, pointed out that a marine insurance was often said to be a contract of indemnity, yet it must always be remembered that it was not a contract of indemnity ideally, but of an indemnity according to the conventional terms of the bargain. When a loss had happened, the question was hardly ever: ‘How much is the assured out of pocket?’ That might be the proper question if the object of the contract was to provide an ideal indemnity. The real question in any case was: ‘What is the measure of indemnity which by the convention of the parties had been promised to the assured?’ That might in some cases be less than an ideal pecuniary indemnity, and in some cases it might be more. ; As illustrations of the measure of indemnity being based on the convention of the parties his Lordship observed:* ‘If the assured has undervalued his ship in the valuation he has agreed upon, he may find that '? Ibid, at 245. °° As to the ‘return of premium’, see Marine Insurance Act 1906, s 84 and pp 82-86, post. " Marine Insurance Act 1906, s 84(3)(b). 2 (1927) 29 LIL Rep 242, KBD. > Ibid, at 244. Contract of indemnity 7 he has suffered pecuniary loss outside any insurable indemnity. That happened very strikingly in Balmoral SS Co v Marten;* indeed, theoretically the same result might arise upon an unvalued policy because, by the convention of the policy, the insurable value of the vessel under s 16 is the value at the commencement of the risk, and theoretically you might have some loss happening at the end of along voyage when the market value of the ship, owing to change of conditions, had considerably increased. Then, as I mentioned just now in argument, by the terms of the bargain, as interpreted in the cases and the Act, the insurable interest in freight allows the gross freight to be insured. That again is laid down ins 16, and obviously if freight is lost at an early stage of along voyage, the assured recovers a great deal more than he ought to upon any ideal pecuniary estimation ofhis loss. Similarly, in some other cases of total loss.’ He then went on to examine the case of a partial loss of goods, and said:° ‘When a partial loss occurs, there are various conventional bases for ascertaining the measure of indemnity that is promised. In the case of goods, you have to find the proportion of the damaged value to the sound value of the goods and apply that to the insured value, or the insurable value. That again may well result in an artificial indemnity differing from the real pecuniary loss to the assured, as for instance, supposing, as may well be, the valuation includes freight payable at the destination and the particular average loss of goods in question is a total loss of part of the insured goods in the course of the voyage; upon them no freight would have to be paid, and to that extent in recovering the insured value ofthose goods the assured would be making an actual profit; that is to say, there is an artificial measure of indemnity which differs fron. the real.’ B ‘LOSSES INCIDENT TO MARINE ADVENTURE’ For the contract to be one of marine insurance it is essential that the loss which is insured against is one incident to a marine adventure. In Re London County Commercial Reinsurance Office Ltd a policy of insurance was issued by an insurance company, the risk insured being against a total loss in the event of peace not being declared between Great Britain and Germany on or before 31 March 1918. The policy was in the marine form. A question arose as to whether it was, in fact, a marine policy, and, therefore, governed by the Marine Insurance Act 1906. It was held by the Chancery Division that it was not a marine policy, and so the Act did not apply to it. PO LawrenceJ, Said?’ ‘The first question . . . is as to the validity of the peace policies. In my judgment these policies are not contracts of marine insurance. It is true that they are made out on the printed form which the company generally uses for its marine policies, but that fact alone does not, in my opinion, make them marine policies. None ofthe printed clauses contained in these policies have any application to the subject-matter of the insurance, and when the substance of these policies is looked at, it is obvious that the losses insured against are not losses incident to any marine adventure. These policies, therefore, do not come within the definition of contracts of marine insurance contained ins 1 of the Marine Insurance Act 1906, and the provisions of that Act do not apply to them.’ C MIXED SEA AND LAND RISKS Section 2(1) of the Marine Insurance Act 1906 states: ‘A contract of marine insurance may, by its express terms, be extended so as to protect the 4 [1902] AC 511. 5 (1927) 29 LIL Rep 242 at 245. © (1922) 127 LT 20, ChD. 7 Ibid, at 24. 8 The nature of marine insurance assured against losses on inland waters or on any land risk which may be incidental to any sea voyage.’ . Thus, in Hyderabad (Deccan) Cov Willoughby® bullion was insured ‘at and from Boodini to London, including all risks of every description, from the mines by escort to railway station at Raichur, thence by rail to Bombay, and thence to London’. In Schloss Bros v Stevens? goods were insured against all risks by land or by water from Cartagena to any place in the interior of Colombia. In Allagar Rubber Estates v National Benefit Assurance Co Ltd'® some cases of rubber were insured under a ‘tree to buyer’ policy, which stated that the risk was to commence ‘from time of entry at receiving house on the estate and until safe delivery taken by the purchaser in London’. Again, in H Cousins & Co Ltd v D and C Carriers Ltd'' a consignment of ladies’ clothing and shoes was insured from Hong Kong to the Port of London, and thence by road to Scotland. Further, in Fuerst Day Lawson Ltd v Orion Insurance Co Ltd‘? oil was insured in steel or iron drums on steamer and/or steamers and/or conveyances or any other method of transportation from ‘anywhere to anywhere’. Section 2(2) of the Marine Insurance Act 1906 states: ‘Where a ship in course of building or the launch of a ship, or any adventure analogous to a marine adventure is covered by a policy in the form of a marine policy, the provisions ofthis Act, in so far as applicable, shall apply thereto.’ Thus, in Jackson v Mumford'* vessels in the course of construction were insured against ‘fire in shops and on board on stocks, trials, and all marine risks to completion and acceptance by Admiralty’. Again, in James Yachts Ltd v Thames and Mersey Marine Insurance Co Ltd'* a builders’ risk policy in the ‘British Columbia Builders’ Risk Form (1946)’ covered ‘Hull, tackle ... boats and other furniture and fixtures and all material belonging to and/or destined for inclusion in all vessels being built at the premises of the assured as specified elsewhere herein’. D THE SUBJECT-MATTER INSURED The principal types of subject-matter which may be insured under a marine insurance policy are: 1 2 3 a ship; goods; freight; 8 [1899] 2 QB 530. ° [1906] 2 KB 665. *© (1922) 10 LIL Rep 564, KBD. As to the interpretation of this clause, see p 123, post. Other cases of mixed sea and land risks include Rodoconachi v Elliott (1874) LR 9 CP 518, Ex Ch (goods detained in the Siege of Paris in the Franco-German war of 1870); King v Victoria Insurance Co [1896] AC 250, PC (wool); Janson v Driefontein Consolidation Mines [1902] AC 484 (bullion); Jacob v Gaviller (1902) 87 LT 26 (dog); British and Foreign Marine Insurance Co v Gaunt [1921] 2 AC 41, HL (wool); G H Renton & Co Ltd v Black Sea and Baltic General Insurance Co Ltd [1941] 1 All ER 149, KBD (timber). T [1971] 2 QB 230, [1971] 1 All ER 55, CA. ‘2 [1980] 1 Lloyd’s Rep 656, QBD (Com Ct). "3 (1904) 9 Com Cas 114, CA. ‘* [1977] 1 Lloyd’s Rep 206 (British Columbia SC). The subject-matter insured 9 profits'> and commission;!° wages; the lability of a shipowner to the owner of the cargo; OS ND loans, advances'’ and disbursements.!8 The meaning of the first three of these terms must now be considered. 1 ‘Ship’ Rule 15 of the Rules for Construction of the Policy’? set out in the First Schedule to the Marine Insurance Act 1906 states: “The term “ship” includes the hull, materials and outfit, stores and provisions for the officers and crew, and, in the case ofvessels engaged in a special trade, the ordinary fittings requisite for the trade, and also, in the case of asteamship, the machinery, boilers, and coals and engine stores, if owned by the assured.’ 2 ‘Goods’ Rule 17 of the Rules for Construction ofthe Policy set out in the First Schedule to the Marine Insurance Act 1906 states: “The term “‘goods” means goods in the nature of merchandise, and does not include personal effects or provisions and stores for use on board.’ 3 ‘Freight’ Meaning of the term Section 90 of the Marine Insurance Act 1906 states: * “Freight” includes the profit derivable by a shipowner from the employment of his ship to carry his own goods or moveables, as well as freight payable by a third party, but does not include passage money.’ Hence, the expression ‘freight’ is employed in three senses: i ii iil t Ordinary freight. Chartered freight. Owner’s trading freight. Ordinary freight Ordinary freight means‘the reward paid to the shipowner for carrying goods in his ship to the port of delivery. Here the term ‘shipowner’ includes the charterer who employs a ship which he has chartered from the actual shipowner to carry goods for third parties. The meaning of ‘ordinary freight’ was explained by Lord Ellenborough CJ, in Forbes v Aspinall?® in the following words:' "S See, eg Wyllie v Povah (1907) 12 Com Cas 317. © See, eg Mentz Decker & Co v Maritime Insurance Co [1910] 1 KB 132. "7 See, eg Price v Maritime Insurance Co [1901] 2 KB 412, CA. "8 See, eg Moran, Galloway & Cov Uzielli [1905] 2 KB 555; New Zealand Shipping Co Ltd v Duke [1914] 2 KB 682. 1° These Rules apply subject to the provisions of the Marine Insurance Act 1906, and unless the context of the policy otherwise requires: Marine Insurance Act 1906, s 30(2). 20 (1811) 13 East 323. " Ibid, at 325. % 10 The nature of marine insurance ‘Freight is the profit earned by the shipowner in the carriage of goods on board his ship, and an insurance upon freight is an insurance made in order to secure that profit to the shipowner in case he is prevented by any of the perils insured against from actually earning such PROUt ee In every action upon such a policy, evidence is given, either that the goods were put on board from the carriage of which freight would result, or that there was some contract under which the shipowner, if the voyage were not stopped by the perils insured against, would have been entitled to demand freight.’ a Chartered freight Chartered freight means the sum of money paid to the shipowner by the charterer for the use of the entire ship for a voyage or for a period of time, whether the payment be by a lump sum, or at specified rates for the cargo carried, or at specified rates for a period of time. When insuring chartered freight it is prudent to insure it under that designation, thereby giving the insurer notice of the charter-party. 2 =Owner’s trading freight Owner’s trading freight means that addition to the cost of his own goods carried in his own ship which the shipowner charges at the port of delivery as the price of carriage. The ‘shipowner’ here includes the charterer who carries his own goods in the chartered ship. The shipowner or charterer does not pay himself for the carriage of the goods, and there is consequently no freight in the usual meaning ofthe term. At the same time, his goods may be augmented in value, by carriage to another port, to an amount which will cover both prime cost and carriage, and this amount may be insured as freight. References to freight insurance in Marine Insurance Act 1906 The references to freight insurance in the Marine Insurance Act 1906 are particularly sparse. Thus, Lord Wright MR, said in Yero Carras (Owners) v London and Scottish Assurance Corpn Ltd:? ‘It is well known that the Act did not deal expressly with the subject offreight insurance except in s 16(2), where it defined the insurable value of an interest in freight as the gross amount of the freight at the risk of the assured plus the charges of insurance, and ins 70, where it gave the rules for adjusting a partial loss on freight. It may indeed be that part ofthe definition of actual loss in s 57(1), that is, the words ‘“‘where the assured is irretrievably deprived” of the subjectmatter insured, may apply to an actual loss® of freight such as the present; similarly, the relevant words of s 60(1) may apply to a constructive total loss* of freight.’ In Kulukundis v Norwich Union Fire Insurance Society” Scott LJ, said:® ‘This case raises for decision certain questions of principle left open by Parliament when it passed the Marine Insurance Act 1906. It is said on what seems to be good authority that the distinguished lawyers who settled the drafting of the Bill were unable to agree upon the law as to insurance of freight, and that is why the Act says so little about it.’ (1935) 53 LIL Rep 131 at 137, CA. See Chapter 27, post. See Chapter 28, post. [1936] 2 All ER 242, CA. Ibid, at 269. aA nF WN CHAPTER 3 The avoidance of wagering or gaming contracts The position before 1745 G The invention of marine insurance was due to the desirability of making good to the merchant and shipowner any loss arising from the destruction of property by tempest or other sea peril. Grotius says that insurance was a contract praestandae indemnitatis circa casus fortuitos.' The cardinal principle ofinsurance, therefore, is the principle of indemnity, and in early times insurances were always effected on the understanding that the person insuring was possessed of property which was about to be subjected to the dangers of a sea voyage. At times, however, insurances were procured by persons who had no property at risk, and who had no intention of risking property, and whose only object was to take the chance ofobtaining from the insurer a sum of money by staking merely the premium. For reasons which it is difficult to support, such insurances were sometimes upheld,* though, as Emerigon points out, an insurance without an object at risk can never be a true insurance. Insurances were, however, formerly classed with lotteries, on the ground that they approximated more nearly to wagers than to any other form ofcontract.? The support given to insurances where there was no property to insure, combined with the placing of insurances in the same category as lotteries, led to the recognition ofa class of insurances which were simply wagers, ie the assured had no property at stake, but simply speculated with his premium on the event of the voyage.* The position after 1745 Such was the position at common law prior to the passing of a series ofstatutes from 1745 onwards. In that year the Marine Insurance Act enacted: ‘That no assurance or assurances shall be made by any person or persons or bodies corporate or politic, on any ship or ships belonging to His Majesty or any of his subjects, or on any goods, merchandises, or effects laden or to be laden on board of any such ship or ships, interest or no interest, or without further proof or interest than the policy, or by way of gaming or wagering, or without benefit of salvage to the assurer, and that every such assurance shall be null and void to all intents and purposes.’ De Fure Belli, i, 12. Roccus, De Assecurationibus, vol X. Puffendorf, Law of Nature, p 25. -r eS Wn See the cases tried on policies ‘interest or no interest’, circa 1740, cited in Fitzgerald v Pole (1754) 4 Bro Parl Cas 439 at 445. 111 ay 12 The avoidance of wagering or gaming contracts The limited nature of the prohibition of wagering policies by this Act ceased to be of any real importance on the passing of the Gaming Act 1845, which declared all contracts by way of gaming and wagering to be void. The Marine Insurance Act 1745 was finally repealed by the Marine Insurance Act 1906, s 4 of which provides: ‘(1) Every contract of marine insurance by way of gaming or wagering is void. (2) A contract of marine insurance is deemed to be a gaming or wagering contract— a where the assured has not an insurable interest as defined by this Act, and the contract is entered into with no expectation of acquiring such an interest; or b where the policy is made “‘interest or no interest” or “without further proof ofinterest than the policy itself”? or “without benefit of salvage to the insurer”’ or subject to any other like term: Provided that, where there is no possibility of salvage, a policy may be effected without benefit of salvage to the insurer.’ It will be seen from s 4(2)(b) that the Act in its terms is inclusive, and that no mere phraseology is aimed at. In order to come within the subsection the terms of the policy must be such as to show a clear intention to depart from the principle of indemnity, and where such intention is shown, the policy is void.? It will, therefore, be seen that, although wager policies were at one time enforced in English courts of law, only those policies are now recognised which effect insurances upon property in which the assured has an interest apart from the policy itself. Thus, in the present view ofthe law, policies of insurance have reverted to the legitimate use for which they were originally devised, ie to protect from loss the merchant who risks his ship or goods in a maritime adventure. Section 4 of the Marine Insurance Act 1906 has been carried a step further by the Marine Insurance (Gambling Policies) Act 1909.° This Act states that if any person effects a contract of marine insurance without having any bona fide interest, direct or indirect, either in the safe arrival of the ship in relation to which the contract is made or in the safety or preservation of the subject-matter insured, or a bona fide expectation of acquiring such an interest, the contract shall be deemed to be a contract by way of gambling on loss by maritime perils.’ The contract is also deemed to be a contract by way of gambling on loss by maritime perils where any person in the employment of the owner® ofa ship, not being a part-owner ofa ship, effects a contract of marine insurance in relation to the ship, and the contract is made ‘interest or no interest’ or ‘without further proof of the interest than the policy itself’ or ‘without benefit of salvage to the insurer’ or subject to any other like term.” In each of the above cases, the person effecting the policy is guilty of an offence, and is liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding £100.'° Ifhe is found guilty, he > Coker v Bolton [1912] 3 KB 315 at 318. © See Appendix I, pp 503-504, post. T See s 1(1)(a). 8 The expression ‘owner’ includes charterer: Marine Insurance (Gambling Policies) Act 1909, s 1(8). ° Ibid, s 1(1)(b). DSI bids si: The position after 1745 13 is liable to forfeit to the Crown any money he may receive under the contract.’ ! Any broker or other person through whom, or any insurer with whom, any such contract is effected, is guilty of an offence and liable on summary conviction to the like penalty if he acted knowing that the contract was by way of gambling on loss by maritime perils within the meaning of the statute.’? Proceedings under the Act cannot be instituted without the consent of the Attorney-General.'* They must not be instituted against a person (other than a person in the employment of the owner of the ship in relation to which the contract was made) alleged to have effected a contract by way of gambling on loss by maritime perils until an opportunity has been afforded him of showing that the contract was not such a contract, and any information given by him for that purpose is not admissible as evidence against him in any prosecution under the Act.'* If proceedings are taken against any person (other than a person in the employment of the owner of the ship in relation to which the contract was made) for effecting such a contract, and the contract was made ‘interest or no interest’, or ‘without further proof of interest than the policy itself? or ‘without benefit of salvage to the insurer’ or subject to any other like term, the contract shall be deemed to be a contract by way of gambling on loss by maritime perils unless the contrary is proved.’» Any person aggrieved by an order or decision of the court of summary jurisdiction may appeal to the Crown Court.'® Notwithstanding the statutory prohibition, the practice of effecting insurances of this kind still continues, particularly in regard to such interest as disbursements and commissions. The policies usually contain a clause in the following form: ‘In the event of loss the production of this policy to be deemed a sufficient proof of interest.’ The clause is styled a p pi clause (ie ‘policy proof of interest’). Such policies are also termed ‘honour policies’, because the assured has to rely entirely on the honour of the insurer in the event of a loss, the policy not being enforceable at law.’ A ppi policy is void even though the assured may in fact have had an insurable interest.‘® ‘! Tbid, s 1(1) ‘2 Thid, s 1(2) OAT bid\: $7113). '4 Tbid, s 1(4) "> Thid, s 1(5) 16 Thid, s 1(7), as amended by the Courts Act 1971, s 56, Sch 9, Part I. ‘7 See Gedge v Royal Exchange Assurance [1900] 2 QB 214; T Cheshire G Cov Vaughan Bros & Co [1920] 3 KB 240 at 251. For the difference between p pi policies in the United States and in England, see Republic ofChina, China Merchants Steam Navigation Co Ltd and United States ofAmerica v National Union Fire Insurance Co of Pittsburgh, Pennsylvania, The Hai Hsuan (No 2) [1958] 2 Lloyd’s Rep 578 (US Dist Ct). For a case where the plaintiffs were not seeking to enforce a gaming policy or to enforce rights arising under it, but were seeking to enforce an obligation on the part of the such a policy which he had already received, see defendant to share with them the proceeds of Bruns v Colocotronis, The Vasso [1979] 2 Lloyd’s Rep 412, QBD Com Ct. (See the judgment of 18 Robert GoffJ, ibid, at 420.) T Cheshire @ Cov Vaughan Bros & Co (1920) 123 LT 487, CA. The facts and decision are set out in more detail at pp 36-37, post. x. 14 The avoidance of wagering or gaming contracts Thus, in Thomas Cheshire & Cov Vaughan Bros & Co‘? exporters of some nitrate from South America instructed their brokers to effect a p pi policy on their prospective profits. The brokers did so, but the policy was unenforceable against the insurers because they failed to disclose a material fact. When the brokers were sued by the exporters for damages for negligence, they pleaded that they were not liable because the policy, being a p pi one, was in any event void under the Marine Insurance Act 1906, s 4. It was held by the Court of Appeal?° that this defence succeeded even though the exporters had an insurable interest in fact. Scrutton LJ, said:' ‘[Counsel] says, [section] 4 of the Marine Insurance Act 1906 is not really so strict as it appears to be. It says: ‘‘(1) Every contract of marine insurance by way of gaming or wagering is void. (2) A contract of marine insurance is deemed to be a gaming or wagering contract: (a) where the assured has not an insurable interest as defined by this Act, and the contract is entered into with no expectation of acquiring such an interest; or (6) where the policy is made ‘interest or no interest’, or ‘without further proof of interest than the policy itself’.”” That only means, ifI understand [Counsel’s] argument, that it is prima facie a gaming and wagering contract and you may defeat it if you can show you either had a real interest or a probability of obtaining it. That is, in effect, to read sub-s (a) of sub-s 2 into sub-s (4). I see no ground for cutting down the section that way.’ Where at the time of issue a policy has a detachable p pi clause, it is void under the Marine Insurance Act 1906, s 4, even though at the time of a claim under it the clause may have been detached by the assured.” Thus, in Re London County Commercial Reinsurance Office Ltd* an insurance company issued a number of policies on vessels. Attached to the policies were detachable p pi clauses. When claims were made by the assured under the policies, in some cases the clauses had been detached, but in others the clauses were left attached. The company went into liquidation, and the liquidator refused to pay the claims on the ground that the policies were void. It was held by the Chancery Division that he was entitled to refuse to pay. All the policies were void under the Marine Insurance Act 1906, s 4. It made no difference whether or not the ppi clause had been detached. P O Lawrence J, said:* ‘The first question which arises on these policies is whether the fact that a detachable p pi clause was gummed on to the policies when they were signed and issued does not render them void under s 4 of the Marine Insurance Act 1906. In my judgment there is no difference between those policies which still have the p pi clause attached to them and those from which the p pi clause has been detached. It is not necessary to consider what course the Court would have adopted if before the policies had been brought to its attention the p pi clause had been detached, and neither ofthe litigating parties had raised the point that such a clause had ever formed part of the policies, because in the present case evidence has been adduced on behalfof the liquidator which proves clearly that the p pi clause was attached to all the policies when they were signed and handed to the assured. In my judgment the proper time to judge whether these policies are valid or void is at the time when they are issued. The subsequent tearing off of the ppi clause by the assured (even though it was done with the permission of the insurers) cannot in my opinion have the effect of rendering the policies valid if they were null and void ? (1920) 123 LT 487, CA. 2° Bankes, Scrutton and Atkin LJJ. " (1920) 123 LT at 493. Re London County Commercial Reinsurance Office Ltd [1922] 2 Ch 67, ChD. (1922) 127 LT 20, ChD. Ibid, at 26. PB WN The position after 1745 15 when they were issued. It was contended, however, that the Court ought not to regard any of the policies as p pi policies because of the introductory words preceding the p pi clause on the detachable slip, which stipulated that the p pi clause was no part of the policy but was to be binding in honour on the underwriters, and might be removed by the assured. In my opinion that contention cannot prevail. The stipulation relied upon is a palpable and, in my opinion, wholly futile attempt to evade the provisions of s4 of the Act of 1906. A stipulation that an important clause affecting the whole tenor ofthe policy should form no part of the policy, and might be removed by the assured, stands self-condemned, and cannot, in my opinion, have the effect of making the policy what it is not, namely, a policy not containing such a clause.’ CHAPTER 4 Insurable interest! A contract of marine insurance being a contract of indemnity, and policies ‘interest or no interest’ being void by s 4 of the Marine Insurance Act 1906, it follows that an assured seeking to recover under a policy must show that he has suffered a financial loss by reason of the non-completion of the adventure; that the loss was caused by a peril insured against; and that the subject-matter in respect of which the loss has taken place was covered by the policy.? Such a financial loss can only result from some relation between the assured and the thing insured.* The range of such possible relations is very wide, varying from absolute ownership to a mere presumptive interest or expectation of profit at the end of the adventure. Indefeasibility of property is not the criterion of interest.* Section 5(1) of the Marine Insurance Act 1906 states: ‘Every person has an insurable interest who is interested in a marine adventure.’ Section 5(2) goes on to state: ‘In particular, a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof.’ Section 5 is based on the words of Lawrence J, in Lucena v Craufurd:° ‘A man is interested in a thing to whom advantage may arise or prejudice happen from the circumstances which may attend it. . . . Interest does not necessarily apply to the whole or part ofa thing, nor necessarily and exclusively that which may be the subject of privation, but the having some relation to, or concern in, the subject of insurance, which relation or concern, by the happening of the perils insured against may be so affected as to produce a damage, detriment or prejudice to the person insuring.’ A EXAMPLES OF PERSONS INSURABLE INTEREST HAVING AN Various persons may have an insurable interest in the subject-matter of the insurance. They can be conveniently considered under the following heads: 1 2 Owner. Mortgagor and mortgagee. See further, Ivamy, General Principles of Insurance Law (4th edn, 1979), pp 20-31. See pp 106-112, post. See pp 16-27, post. : Starling v Vaughan (1809) 11 East 619. See further, Marine Insurance Act. 1906, s 7(1). (1806) 2 Bos & PNR 269 at 302. nr WN 16 Examples of persons having an insurable interest 3 Master and crew. 4 Agent. oo Carrier. 6 Lien holders and pawnors. 7 Trustees and executors. 1 ) 8 Captors. 9 Insurer. 10 11 Persons expecting a profit from a marine adventure. Lender of money on bottomry or respondentia. / Marina operator. 12 17 Owner 4 In considering the various modes of insurable interest, the most important is ownership, which is the simplest form of insurable interest. (a) Ownership of ship The interest of the owner remains although he may have let out his ship under a charter-party upon terms which would entitle him to recover from the charterer the value ofthe ship in the event ofher loss. He is not bound to trust to the charterer or to the charterer’s underwriters, but he may insure the ship with other underwriters on his own account.°® Thus, s 14(3) of the Marine Insurance Act 1906 provides: “The owner ofinsurable property has an insurable interest in respect of the full value thereof, notwithstanding that some third person may have agreed, or be liable, to indemnify him in case of loss.’ 3 The ownership of a vessel is not usually a difficult matter to ascertain. Thus, in Piper v Royal Exchange Assurance’ a yacht in Norway was bought in 1926 ‘as she lies’ by the plaintiff, and was at the risk ofthe seller until she arrived in London. The plaintiff effected a policy in respect of her, and claimed against the insurers for damage which she had suffered by stranding in 1928.° The insurers counterclaimed for £346 15s 10d (which they had paid him in respect of damage suffered by her on the voyage from Norway to London in 1926) on the ground that he had no insurable interest in her. Roche J, held that the counterclaim succeeded on this ground, and observed :” ‘Now, in those circumstances the underwriters say: ‘“We insured the plaintiff through the broker on the basis that he had an interest, and we paid him on the basis that he had an interest, and he had not, and in those circumstances we claim the recovery back of the sum which we paid in settlement of this particular average claim.” In my judgment, the underwriters are so entitled. Suffice it to say that in my judgment the plaintiff had no interest here. It is unnecessary to decide, but it is probable that he had an interest, not in the ship itself, but in its arrival, which might have been insured and constituted an insurable contingent interest, but I think it ought to have been so described, and this is just one of those matters of interest which requires to be © Hobbs v Hannam (1811) 3 Camp 93; Provincial Insurance Co ofCanada v Leduc (1874) LR 6 PC 244 at 244. 7 (1932) 44 LIL Rep 103, KBD. 8 As to this point, see p 239, post. ° (1932) 44 LIL Rep 103 at 116. a 18 Insurable interest defined, because it is necessary still to define the subject-matter insured, although it is not necessary to specify the nature and extent of the injuries to the subject-matter insured. I am not saying that the plaintiff ought to or could have insured it under the designation of profits; I am only saying that he could not insure it under the title of the ship itself so as to enable him to recover for particular average to that ship upon a voyage in a case when he was not concerned with what happened to the ship by way of damage on that voyage, and where he had nothing to pay by reason of any particular average which was suffered by the ship.’ (6) Ownership of cargo The ownership ofcargo sometimes gives rise to discussion, turning on the rights of seller and buyer. The question ofinsurable interest in the cargo depends on the terms ofthe contract of sale, and on the stage at which the property in the goods sold passes from the seller to the buyer. The passing of the property in the goods is governed by the Sale of Goods Act 1979, ss 16 to 19.'° In Re National Benefit Assurance Co Ltd (Application of H L Sthyr),‘* which concerned an “all risks’ policy in respect of thirty bales of woollen goods ‘from Tilbury to Novorossisk for Rostoff-on-Don’, one of the issues’? which arose was whether the goods had been sold by the assured to the purchaser, or whether they had only been sold subject to their safe arrival at Rostoff-on-Don. In fact, the goods never reached Rostoff-on-Don. When the assured claimed for a loss under the policy, the insurers contended that he had no insurable interest in them because he had already sold them. MaughamJ, held that the claim succeeded, for the assured had an insurable interest, since the sale was only conditional on the arrival of the goods. He observed :'* ‘Then remains the more serious question as to whether there was not an out-and-out sale to Mr Vitouchnovsky and the present claimant 1s unable to make a valid claim. In that matter there is this difficulty, that all the documents which were in existence at the time, or practically all of them, have been destroyed and the records of the Russo-Scandinavian Bank have been taken over by the People’s Bank and there is some difficulty in ascertaining the facts. Mr Harald Sthyr says that no sale was made until the bank had information that the goods had arrived at Rostoff-on-Don and payment made not later than 45 days afterwards. Mr Vitouchnovsky and Mr Harald Sthyr have been called, and the former says he never saw the goods and that the sale was conditional on the goods reaching Rostoff-on-Don. I think that taking into consideration what took place when the State Bank took possession, I should be quite wrong in coming to the conclusion that the property passed before the goods reached Rostoff-on-Don.’ An unpaid seller who has divested himself of the property and the possession of goods which are in the course of transit to the buyer has the right to resume possession of them in the event of the buyer becoming insolvent.'* This right which is known as the seller’s right of stoppage in transit is exercised by the seller physically retaking possession of the goods or by his giving notice to the carrier or other baileein whose possession the goods are,’ and its effect is to give the seller a lien on the goods for payment of the price.'® '° These sections are set out in Appendix I, pp 483-484, post. 1 (1933) 45 LIL Rep 147, ChD. ‘2 The case also concerned the question of the burden of proof ofa loss under an ‘all risks’ policy. As to this point, see pp 178-179, post. 13 (1933) 45 LIL Rep 147 at 151. 14 Sale of Goods Act 1979, s 39 et seq. 15 Ibid, s 46. ‘© Ibid, s 48. - Examples of persons having an insurable interest 19 Once this right of stoppage in transit has been exercised, the seller, although not in law the owner of the goods, has an insurable interest in them by virtue of his lien. Whether the mere existence of the right and the possibility that the seller may exercise it is in itself sufficient to constitute an insurable interest is more doubtful, although support for the affirmative view is to be found in Moran v Uziellt. (c) I Ownership offreight ORDINARY FREIGHT In the case ofordinary freight’® the insurable interest is in the shipowner, who will receive the price for the carriage of the goods only on their arrival at the port of destination. Thus, Lord Russell CJ, said in Weir & Co v Girvin & Co:'° ‘Freight is a payment to be made to the ship for carriage and delivery, and until there has been carriage and delivery, the shipowner is not under ordinary circumstances entitled to demand freight at all.’ In this definition, ‘delivery’ does not mean the actual handing over of the goods carried, but merely that the goods have arrived at the port of delivery, and that the shipowner is in a position to deliver them. As a general rule, if the goods are put ashore at some point short of their destination, freight is not earned, even though this may have been the only alternative to a certain loss of the goods. The freight is, therefore, at risk when the ship starts on her voyage, and it may be totally lost to the owner by any peril which prevents the arrival of the ship and the goods at the port ofdestination.*° On the other hand, as long as the cargo delivered is, commercially speaking, identical with that which was loaded, the full freight is payable even though the goods are delivered in a damaged condition.’ It follows that the cargo owner, as well as the shipowner, has an insurable interest in the freight to this extent— e that ifhe has to pay full freight for goods which arrive in a damaged condition, he suffers a loss on the elements which go to make up the price of goods at the port of delivery. These elements are: 1 prime cost; 2 freight; 3 4 port dues; profits. '7 [1905] 2 KB 555. '8 For the meaning of ‘ordinary freight’, see pp 9-10, ante. 19 11899] 1 OB 193 at 196. 20 Dakin v Oxley (1864) 15 CBNS 646; Asfar & Co v Blundell [1896] 1 QB 123; Henriksens Redert A/S v T H Z Rolimpex (The ‘Brede’) [1974] QB 233, [1973] 3 All ER 589, CA; Aries Tanker Corporationv Total Transport Ltd [1977] 1 All ER 398, [1977] 1 WLR 185, HL; Montedison SpA v Icroma SpA, The Caspian Sea [1979] 3 All ER 378, [1980] 1 WLR 48, QBD (Com Ct). m= Accordingly, in Griffiths v Bramley-Moore (1878) 4 QBD 70, where the policy was expressed to cover ‘only one-third loss offreight in consequence of sea-damage as per charter-party’ and the charter-party provided that in the event of any of the cargo being sea-damaged, freight on such portion was to be reduced by one-third, it was held on the happening ofthis event that there had been a total loss of one-third of the freight. 20 Insurable interest If, therefore, the goods arrive in a damaged condition, so that the owner only receives three-fourths of the price of sound goods, the loss embraces one-fourth of each of the elements which make up the price of sound goods, and thus he loses one-fourth of the freight.? This point is, however, purely academic, and it only applies to goods arriving in adamaged condition. Since goods are usually insured under a valued policy, a loss of freight as being part of the value ofthe goods would be provided for. 3In many cases the shipper of goods under a bill of lading is required to pay freight in advance either on shipment of the goods or on the signing of the bills of lading or on the sailing of the vessel. Such a person is, of course, entitled to insure the freight which he has paid in advance. Thus, s 12 of the Marine Insurance Act 1906 states: ‘In the case of advance freight, the person advancing the freight has an insurable interest, in so far as such freight is not repayable in case of loss.’ II CHARTERED Chartered FREIGHT freight* may give rise to three forms of insurable interest, the existence of which will, however, depend on the terms of the charter-party. The shipowner is entitled to insure the chartered freight if its payment is contingent on some event which may be frustrated by maritime or other perils, eg by the operation of the ‘off-hire clause’. If, however, the whole or part of the chartered freight is paid in advance, the shipowner cannot insure that which is so paid, since it is not at risk. But the right to insure it is in the charterer, since the risk is his. Thus, s 12 of the Marine Insurance Act 1906 states: ‘In the case of advance freight, the person advancing the freight has an insurable interest, in so far as such freight is not repayable in case of loss.’ The charterer may also insure freight to be earned by the ship for him if he has chartered her for use as a general ship. In such a case, however, if he has paid freight in advance and insured it, he would not be entitled to recover both on the policy insuring his advance freight and on the policy insuring his bills of lading freight, unless that policy showed a loss on the advance freight, in which event the difference would be recoverable as lost advance freight. In such a case the charterer may insure profit freight;° and, of course, if by his contract the charterer incurs any liability in respect of the loss—either total or partial—of the ship, he has an insurable interest in the ship herself, quite apart from freight.° A question often arises whether an advance of money to the ship by the charterer, which is not expressed to be a payment of freight in advance, nor a payment on account of freight, is really advance freight, or whether it comes under some other designation, such as a loan. See Benecke, Principles of Indemnity, p 24. See Thames and Mersey Marine Insurance Co Ltd v Pitts, Son and King [1893] 1 QB 476. For the meaning of ‘chartered freight’, see p 10, ante. Asfar & Cov Blundell [1895] 2 QB 196; affd [1896] 1 QB 123. See further, United States Shipping Co v Empress Assurance Corpn [1907] 1 KB 259. ° Hobbs v Hannam (1811) 3 Camp 93. Examples of persons having an insurable interest 21 Such payments being made usually at the ship’s port of loading, the chief test of the nature of the payment is whether or not it was intended to be insured; if there was an intention to insure such a payment, it is deemed to be advance freight.’ The difference between the two forms of advance payments was thus stated by Bayley J, in Manfield v Maitland:® ‘If the memorandum ofcharter-party had clearly expressed that the money advanced should be in part payment ofthe freight, then it would follow that the loss of the ship would produce a loss of the money advanced to the freighter, and he would have an insurable interest in it. But if that be not so, and it be only a loan by the freighter, he would have no insurable interest, having a remedy against the owner for the debt.’ In Hicks v Shield® the charter-party provided ‘cash for ship’s disburséments to be advanced to the extent of £300 free of interest, but subject to insurance and £2 10s per cent commission . . . the freight to be paid on unloading and right delivery of cargo as follows, say, in cash less 2 months’ interest at 5 per cent per annum, and if required £300 to be paid in cash on arrival, less 2 months’ interest.’ It was held that the stipulated advance of £300 was an advance of freight, and that on the loss of the ship the charterer could not recover back that advance on the ground that it was a loan. Lord Campbell CJ, said:'° “This mention of insurance seems to me to stamp the transaction indelibly as a payment on account of freight, and not as a mere loan; for if the advance was to be insured, it must be an advance of freight, which is insurable, whereas a loan is not. There is nothing necessarily inconsistent in the other clause that “‘the freight is to be paid on unloading and right delivery of cargo”’. This may refer to the payment ofthe residue of the freight not already advanced.’ The allowance of insurance in such cases imposes no obligation on the shipowner to insure the advance freight."' Indeed, except that the shipowner allows the freighter the amount required to insure the advance, the mention ofinsurance in no way affects the contract of hire or of carriage.'* Where chartered freight is insured, it is essential that there should exist some definite and binding contract under which freight is payable,'* although it is not necessary that the contract should be in writing.'* Moreover, some step must have been taken under the contract towards earning the freight. Thus, in Barber v Fleming'> Blackburn J, said:'® Allison v Bristol Marine Insurance Co (1876) 1 App Cas 209; Hicks v Shield (1857) 7 E&B 633; The Red Sea [1895] P 293; on appeal [1896] P 20. (1821) 4 B& Ald 582 at 585. (1857) 26 LJQB 205. 1 fo} Ibid, at 208. 1! Jackson v Isaacs (1858) 3 H&N 405. 12 Smith, Hill & Co v Pyman, Bell & Co [1891] 1 QB 742. See also, Rodocanachi v Milburn (1886) x oOo @ N 18 QBD 67; Great Indian Peninsular Rly Co v Turnbull (1885) 53 LT 325. 1 wW Flint v Flemyng (1830) 1 B& Ad 45; Scottish Shire Line Ltd v London and Provincial Marine and General Insurance Co Ltd [1912] 3 KB 51. 14 Warre v Miller (1825) 4 B&C 538; Patrick v Eames (1813) 3 Camp 441. 1S (1869) LR 5 QB 59. a" a Ibid, at 67. See also, Davidson v Willasey (1813) 1 M&S 313; Thompson v Taylor (1795) 6 Term Rep 478; Horncastle v Suart (1806) 7 East 400; Foley » United Fire and Marine Insurance Co of Sydney (1870) LR 5 CP 155. 22 Insurable interest ‘When a shipowner has got a contract with another person under which he will earn freight, and has taken steps and incurred expense upon the voyage towards earning it, then his interest ceases to be a contingent thing, but becomes an inchoate interest, and is an interest which, if the perils insured against, is lost, and ought to be paid for by the afterwards destroyed by one of underwriters.’ II OWNER’S TRADING FREIGHT? / . When the shipowner carries his own goods in his own ship, he is permitted to insure, as freight, that increase in price which he, as shipowner, will earn on his own goods by carrying them in his own ship. In other words, under an insurance on freight the assured may recover the profits expected to be made by carrying his own goods in his own ship on the voyage insured.'® Where a shipowner is carrying his own goods in his own ship, two conditions are required in order to establish an insurable interest in freight: 1 2 2 the ship must be ready to carry a cargo; and there must exist a cargo intended to be shipped, for until such a cargo is ready she cannot be in a position to earn freight.'° Mortgagor and mortgagee Section 14(1) of the Marine Insurance Act 1906 states: ‘Where the subject-matter insured is mortgaged, the mortgagor has an insurable interest in the full value thereof...’ The reason for this is that he is the owner, and he is under covenant to repay the mortgage debt. Where the mortgage instrument contains a covenant by the mortgagor to insure the vessel on behalf of the mortgagee, the mortgagor is deemed to be a trustee for the mortgagee of any proceeds of the policy.7° Section 14(1) of the Marine Insurance Act 1906 states: ‘Where the subject-matter insured is mortgaged . . . the mortgagee has an insurable interest in respect of any sum due or to become due under the mortgage.’ Further, s 14(2) states: ‘A mortgagee. . . may insure on behalf and for the benefit of other persons interested as well as for his own benefit.’ Ifthe mortgagee’s advance is not equal to the value ofthe ship, and he insures the ship to her full value, he will not be able to recover more than the value of his advance unless he can show that at the time when he executed the policy, he intended to insure the interest of the mortgagor. ' An unregistered mortgagee of a Greek ship has an insurable interest in the ship noby ae sandine according to Greek law all unregistered mortgages are void. '” For the meaning of ‘owner’s trading freight’, see p 10, ante. "8 De Vaux v 7’Anson (1839) 5 Bing NC 519. 1° Flint v Flemyng (1830) 1 B& Ad 45; De Vaux v 7’Anson, supra. 2° ‘Swan & Cleland’s Graving Dock and Slipway Co v Maritime Insurance Co, & Croshaw [1907] 1 KB 116. As to the legal position of a mortgagee ofa ship, see the Merchant Shipping Act 1894, ss 31 to 46. " Irving v Richardson (1831) 2 B& Ad 193; Ladbroke v Lee (1850) 4 Dé G&Sm 106. See further, Williams v Atlantic Assurance Co Ltd [1933] 1 KB 81. , 2 P Samuel & Co Ltd v Dumas [1924] AC 431. Examples of persons having an insurable interest 23 In P Samuel & Co Ltd v Dumas a shipowner purported to mortgage a Greek vessel to a mortgagee to secure moneys due and to become due under a current account. The mortgage was to be registered in Greece, but, in fact, it never was registered. The vessel was lost and a firm of shipbrokers, who had insured her under a time policy on behalf of the mortgagee, claimed against the insurer under the policy. One of the grounds* on which the insurer denied liability was that the mortgagee had no insurable interest. The House of Lords® held that he had an insurable interest under s 5(1) of the Marine Insurance Act 1906, for he had an equitable right to a mortgage, and so was ‘interested in a marine adventure’. Viscount Cave observed:°® / ‘In the present case the appellant held a British mortgage on the ship and a deed of covenant which recited an agreement by the owner to deliver to the mortgagee a ‘“‘formal first mortgage of the said steamship duly executed and registered in Greece”, and contained a covenant by him to “take such steps as might be necessary to effect the complete registration of the said steamship as a Greek steamship”’: and he was entitled in equity to enforce these agreements. This being so, I think it impossible to say that he was not interested in the adventure within the meaning of the above section; and, ifso, he clearly had an insurable interest to the extent of the sum secured by the mortgage.’ 3 Master and crew Prior to the Merchant Shipping Act 1854 the rule of maritime law was that ‘freight is the mother of wages’. It followed that ifa vessel were lost in the course of her voyage, nothing was due to the seamen on account of wages. Moreover, by way of further identifying the interest of the crew with the success of the adventure it was deemed to be contrary to public policy to permit a seaman to insure his wages, although the master was placed at no such disadvantage.’ This distinction was done away with by the Merchant Shipping Act 1854 (since repealed) and now by the Merchant Shipping Act 1894 a seaman is entitled in the event of the loss of his ship to his wages up to the date of loss. Section 157(1) of the Merchant Shipping Act 1894 provides: ‘The right to wages shall not depend on the earning of freight; and every seaman and apprentice who would be entitled to demand and recover any wages, if the ship in which he has served had earned freight, shall, subject to all other rules of law and conditions applicable to the case, be entitled to demand and recover the same, notwithstanding that freight has not been earned...’ Section 11 of the Marine Insurance Act 1906 states: ‘The master or any member of the crew of a ship has an insurable interest in respect of his wages.’ > [1924] AC 431, HL. * Other aspects of the case concerned a breach of warranty, waiver of a breach of warranty, connivance ofthe owner at the scuttling ofthe vessel, and the meaning of‘perils ofthe sea’. As to these points, see pp 290-291, post, p 312, post, p 235, post, and p 145, post, respectively. > Viscount Haldane LC, Viscount Cave, Viscount Finlay, Lord Sumner and Lord Parmoor. © [1924] All ER Rep 66 at 74. See also, the speech of Lord Sumner, ibid, at 82, and that of Viscount Finlay, ibid, at 77. 7 King v Glover (1806) 2 Bos& PNR 206. 24 Insurable interest 4 Agent An agent has no insurable interest if his only relationship to the goods is that of agent for another person. Thus, in Seagrave v Union Marine Insurance Co® a broker sold as agent on commission a cargo ofgoods, and the bill of lading was made out to his order or assigns, and he held the bill of lading until the purchaser had given an acceptance for the amount ofthe goods. It was held that he could not recover on a policy which he had effected in respect of the goods, as he had no interest in the cargo, and, being a mere agent, incurred no liability and suffered no damage through the loss. On the other hand, an agent, who has made advances, may insure the goods consigned to him to the extent, at any rate, of the advances he has made upon them. Thus, in Ebsworth v Alliance Marine Insurance Co,? where consignees gave acceptances against consignments of cotton and insured the consignments and their advances by open cover on which they declared from time to time, it was held that they had an insurable interest for the amount of an advance on a particular consignment which was lost by perils insured against. Similarly, an agent may have an insurable interest in profits or commission which he expects to earn on goods consigned to him, eg a shipbroker in the brokerage on a vessel addressed to him. There must, however, be a legal and binding contract under which the profits or commission are payable, and mere expectation is not sufficient. An agent having himself an insurable interest in respect of advances, profits or commission, as the case may be, is entitled to insure not only on his own behalf but also on behalf of all other persons interested in the same subjectmatter. Thus, s 14(2) of the Marine Insurance Act 1906 states: ‘A... person having an interest in the subject-matter insured may insure on behalf and for the benefit of other persons interested as well as for his own benefit.’ In the event of his doing so it would seem that in any action brought by the agent upon the policy it is necessary to allege the interests of such other persons.° 5 Carrier A carrier has an insurable interest in the goods committed to him for carriage.'' Although he is not the actual owner, he may insure and also sue on the policy 8 (1866) LR 1 CP 305. See further, Wolff'v Horncastle (1798) 1 Bos& P 316; Conway v Gray (1809) 10 East 536 at 547; Carruthers v Sheddon (1815) 6 Taunt 14. (1873) LR 8 CP 596. See further, Wolff vHorncastle, supra. See, however, the opinions of Bovill CJ, and Denman J, to the contrary in Ebsworth v Alliance _ - Marine Insurance Co (1873) LR 8 CP 596. Crowley v Cohen (1832) 3 B& Ad 478; Joyce v Kennard (1871) 71 LJQB 17; Stephens v Australasian Insurance Co (1872) LR 8 CP 18; Hill vScott [1895] 2 QB 713; The Yasin [1979] 2 Lloyd’s Rep 45 at 53, QBD (Com Ct) (per Lloyd J). For an example ofa policy issued to a charterer in respect of loss of or damage to cargo owned by third parties, see Kuehne and Nagel Inc v Baiden [1977] 1 Lloyd’s Rep 90 (NY Ct App), where it was held that the cargo owner’s claim for damage had been reasonably settled by the assignees ofthe assured. (See the judgment of GabrielliJ,ibid, at 92.) Examples of persons having an insurable interest 25 provided he sues as trustee for the owner; otherwise he may be unable to recover, if under the terms of his contract of carriage he has incurred no risk.'? 6 Lien holders and pawnors A person who has a lien on the property has an insurable interest in it to the amount of his lien, and the pawnee of goods which are assigned to him by indorsement of the bill of lading can insure them.'? Again, a ship’s carpenter having a lien for repairs has an insurable interest. '* But no right of lien on a ship is conferred on the lender who advances money for the ship on bills of exchange; and the judgment of the French Court in Castrique v Imrie,‘> given against the master ‘en sa qualité de capitaine et par privilége sur le navire’, purporting to apply English law to a British ship, and expressing a contrary view, was erroneous; although the decision was held not to be examinable in this country, it being a judgment in rem. But where advances had been made for necessaries, thereby conferring a right to enforce the debt by an action in rem under s 6 of the Admiralty Court Act 1840, the creditor had an insurable interest in the ship to the extent of the advances.'° Salvors have a lien on the ship salved. Therefore, where an owner paid the salvage claim, he was held to have a lien on the cargo for that share of the claim which was due from the cargo, and consequently to have an insurable interest to that extent in the cargo.’ The pawnor has also an insurable interest, if the transaction by which the ship has been hypothecated is, in fact, a pledge and not a sale.'® Where a shipowner has incurred liabilities to salvors in respect of services rendered during the voyage, he has an insurable interest in the other interests on board to the extent to which he may be liable to contribute in general average to satisfy the claims ofthe salvors whether claimed on a salvage bond or otherwise. '” 7 Trustees and executors Legal ownership is vested in trustees and executors by virtue of the office which they hold, and they have an insurable interest in the property so vested, such interest enuring for the benefit of the beneficial owners, heirs, or legatees. Thus, in Stirling v Vaughan?® Lord Ellenborough CJ, said:' ‘What is the case of an executor; probate is necessary to complete his title, yet before probate he has title sufficient to enable him to insure.’ 12 Scott v Globe Marine Insurance Co Ltd (1896) 1 Com Cas 370. vPratt (1843) 11 M&W 296. See also, Hibbert v Carter (1787) 1 Term Rep 745; Wolffv 13 Sutherland Horncastle (1798) 1 Bos&P 316; Ebsworth v Alliance Marine Insurance Co (1873) LR 8 CP 596. 14 Tasker v Scott (1815) 6 Taunt 234. 'S (1860) 8 CBNS 405. 16 Moran, Galloway & Co v Uzielli [1905] 2 KB 555. 17 Briggs v Merchant Traders’ Association (1849) 13 QB 167. See also Dixon v Whitworth 4 CPD 371. 18 Alston v Campbell (1779) 4 Bro Parl Cas 476. ‘9 Briggs v Merchant Traders’ Association (1849) 13 QB 167. 20 (1809) 11 East 619. ©_ (1880) Ibid, at 628. See further, Tidswell v Ankerstein (1792) Peake 151; London and North-Western Rly Co v Glyn (1859) 1 E&E 652; Waters v Monarch Life Assurance Co (1856) 5 E&B 870. 26 Insurable interest 8 Captors Captors have an insurable interest in property captured in time of war, by reason ofpossession with its attendant liabilities, eg a liability to be ordered to restore the property and pay costs. Section 7(1) of the Marine Insurance Act 1906 states: ‘A defeasible interest is insurable, as also is a contingent interest.’ There must, however; be something more than mere expectation in the captor; there should be a vesting of the property by virtue of the Prize Act. \ Failing a right under the Prize Act, captors should insure on behalf of the Crown, though an insurance made by captors for the benefit ofall concerned is held to be made under the implied authority of the Crown. The insurable interest exists notwithstanding the fact that captors are liable to be dispossessed by an order of release made by the Crown before adjudication; for indefeasibility of property is not a criterion of insurable interest.? 9 Insurer An insurer has an insurable interest in the thing insured to the extent of his liability in the event ofa loss, and he is entitled to protect himself by reinsuring. Thus, s 9(1) of the Marine Insurance Act 1906 states: ‘The insurer under a contract of marine insurance has an insurable interest in his risk, and may reinsure in respect ofit.’ An insurer is not bound to state that he is reinsuring. If he has insured on goods, he may reinsure by describing the interests as ‘on goods’.? In practice, however, it is almost invariable for a reinsurance policy to contain a clause stating: ‘Being a reinsurance subject to the same clauses and conditions as the original policy and to pay as may be paid thereon.”* 10 Persons expecting a profit from a marine adventure Profits which may naturally be expected to result from the successful termination of the adventure are insurable.° But this form of insurable interest should be specifically described in the policy as ‘profits’.° It must, however, be shown that there was a well-founded and reasonable probability ofa profit being made’ since a mere expectation ofgain at the close of a voyage is not sufficient to create an insurable interest.® > Stirling v Vaughan, supra; Routh v Thompson (1809) 11 East 428; subsequent proceedings (1811) 13 East 274. See further, Marine Insurance Act 1906, s 7(1). Mackenzie v Whitworth (1875) 1 ExD 36. See further, Craufurd v Hunter (1798) 8 Term Rep 13; Lucena v Craufurd (1806) 2 Bos& PNR 269; Stirling v Vaughan (1809) 11 East 619. As to the effect of this clause, see p 466, post. ~ Barclay v Cousins (1802) 2 East 544; Andersonv Morice (1875) LR 10 CP 609; Harland and WolffvF Burstall G Co (1901) 84 LT 324. McSwiney vRoyal Exchange Assurance Corpn (1849) 14 QB 634; Halhead vYoung (1856) 6 E&B 312; Inglis v Stock (1885) 10 App Cas 263. Hodgson v Glover (1805) 6 East 316; Eyre v Glover (1812) 16 East 218; Ionides v Pender (1872) 27 LT 244. : Knox v Wood (1808) 1 Camp 543; Buchanan & Co v Faber (1899) 4 Com Cas 223. Examples of persons having an insurable interest 27 To give rise to a claim under an insurance on profits, it must be shown that the loss arose by a peril insured against and not merely from a fall in the market. Moreover, the goods on which the profit is expected to be made must be at risk and the assured must have an insurable interest in them.? A shareholder in a limited company has no insurable interest in the property of the company, since that property is vested in the company itself and not in any individual member.'° But he can insure profits which may be expected to result from any maritime adventure on which the company embarks, although his right to such profits would only exist by reason of his position as a shareholder.!! 11 Lender of money on bottomry or respondentia Section 10 of the Marine Insurance Act 1906 states: ‘The lender of money on bottomry or respondentia has an insurable interest in respect of the loan.’ The existence of these interests depends on the due arrival of the ship and the goods. Therefore, where the advance is on ship, freight and cargo, and is to be repaid in any event, there is no interest insurable as bottomry.'? It is suggested by Emerigon that the lender cannot also be the insurer, since, in such a case the loan would lose its maritime character and become a simple usurious loan.'? 12 Marina operator A marina operator may insure against legal liability for loss of or damage to craft belonging to third parties whilst in his care.'* B EXISTENCE OF INSURABLE THE LOss!> INTEREST AT THE TIME OF Since the principle of indemnity is the very foundation of marine insurance, it follows that a person who, at the date ofthe loss, has parted with his interest, or, though in negotiation for, has not yet acquired an interest in the thing insured, cannot successfully prosecute a claim under a policy. Section 6(1) of the Marine Insurance Act 1906 states: ‘The assured must be interested in the subject-matter insured at the time ofthe loss though he need not be interested when the insurance is effected.’ Thus, in Powles v Innes'® in January 1838, the plaintiffs, insurance agents, by ° Stockdale v Dunlop (1840) 6 M&W 224; McSwiney v Royal Exchange Assurance Corpn (1849) 14 OB 634. Cf Wilson v Fones (1866) LR 1 Exch 193; on appeal (1867) LR 2 Exch 139. 10 Paterson v Harris (1861) 1 B&S 336. See further, R v Arnaud (1846) 9 QB 806. 1! Wilson v Jones (1866) LR 1 Exch 193. 12 Stainbank v Fenning (1851) 11 CB 51; Stainbank v Shepard (1853) 13 CB 418. 13 See Glover v Black (1763) 3 Burr 1394. 14 See eg Pillgrem v Cliff Richardson Boats Ltd and Richardson; (Switzerland General Insurance Co, Third Party) [1977] 1 Lloyd’s Rep 297 (Supreme Court of Ontario), where the question was whether the loss had occurred in the ‘alteration, repair or maintenance’ of a cabin cruiser. 1S See also, Ivamy, General Principles ofInsurance Law (4th edn, 1979), pp 28-31. 16 (1843) 11 M&W 10. See also, Camden v Anderson (1798) 1 Bos&P 272. 28 Insurable interest directions from, and on account and for the benefit of, Robert Page and Robert Chamberlain, effected a time policy in respect of two-thirds of the ship ‘Commerce’, which was lost in January 1839, during the currency ofthe policy. Before the loss Page conveyed his share to Sarah Banks, who already owned one-third. On the day after the sale Sarah Banks effected a policy in respect of her two-thirds, upon which she was paid as for a total loss. The defendant was an underwriter for £150, and paid £75 as being due to Chamberlain in respect of his share. It was held that as Page had parted with his interest before the loss, he was not entitled to recover. Again, in North of England Oil Cake Co v Archangel Insurance Co,'’ the insurance was effected in November 1871, on goods. In February 1872, the owners sold the goods, which were still on the voyage, for cash payable fourteen days after the goods were ready for delivery at the port. On 21 February 1872, the bills of lading were indorsed to the buyers. On 26 February the ship arrived in port, and two days later, while unloading overside into lighters, one lighter sank alongside the buyers’ wharf. The loss was within the policy, being occasioned by perils insured against. When afterwards an action was brought by the buyers, to whom the policy had been assigned after the loss, it was held that, inasmuch as on the sale of the goods the policy was not assigned to the buyers, the interest under the policy remained vested in the sellers, and on delivery of the goods the interest ofthe sellers ceased, and the policy became a nullity, and no subsequent assignment could revive it.'8 These decisions do not, ofcourse, affect the right ofan assignee to recover on a policy, though he had no interest in the subject-matter of the insurance at the time when the policy was executed. It is sufficient that at the date ofthe loss he was entitled both to the policy and to the goods.'® Like any other interest, if it exists at the time ofthe loss, an insurable interest in freight may be recovered in an action on the policy. This will also be the case under a time policy, even though that policy must have expired before the freight could have been earned.*° ‘Lost or not lost’ Insurances are often effected without any information being forthcoming as to the safety of the ship or cargo. If, therefore, either ship or cargo should be lost before the insurance is effected, the interest of the assured will have ceased to exist, and he would be unable to recover on the policy, although it was executed in perfect good faith and in ignorance of the loss. In order to avoid this result, the words ‘lost or not lost’ are introduced into the policy, and these words render the insurer liable, although, in fact, at the date of the policy the loss may have taken place and the interest of the assured may have ceased to exist. Hence s 6(1) of the Marine Insurance Act 1906 provides that: *. 17 . where the subject-matter is insured “‘lost or not lost”’, the assured may recover although he (1875) LR 10 QB 249. See also, Anderson v Morice (1876) 1 App Cas 713. "8 As to assignment, see generally pp 315-321, post. "9 Lower Rhine and Wurtemburg Insurance Association v Sedgewick [1898] 1 QB 739 at 745; Rhind v Wilkinson (1810) 2 Taunt 237; Sparkes v Marshall (1836) 2 Bing NC 761; LloydvFleming (1872) LR 7 QB 299. 20 Michael v Gillespy (1857) 26 LJCP 306. Existence of insurable interest at the time of the loss 29 may not have acquired his interest until after the loss, unless at the time of effecting the contract of insurance the assured was aware of the loss, and the insurer was not.’ Section 6(2) states: ‘Where the assured has no interest at the time of the loss, he cannot acquire interest by any act or election after he is aware of the loss.’ It may be noted that where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract was made, the contract is void.! 1 Sale of Goods Act 1979, s 6. CHAPTER 5 The duties of a broker in effecting the policy Where a broker is employed to effect a policy, certain duties must be performed by him. Thus, he must: 1 2 3 1 obey his principal’s instructions; use proper skill and care; carry out the transaction. Duty to obey his principal’s instructions The primary duty ofthe broker is to obey the assured’s instructions and effect a policy accordingly.’ In considering the law on the matter it must be pointed out that in many of the reports of the early cases the words ‘agent’ or ‘correspondent’ are used with reference to the person effecting the policy. It would appear that these terms often mean ‘broker’, for at that time the profession of brokers was not fully organised, and those engaged in mercantile transactions might at the same time fulfil the triple functions of brokers, underwriters and agents. Perhaps the chief rule that the Courts evolved was that the broker was under a duty to act bona fide in all cases, and this was particularly so when no special instructions regarding the policy had been given to him by his principal.” One ofthe earliest cases is Moore v Mourgue* decided by Lord Mansfield. The action was brought by the plaintiff, who was a merchant at Alicante, against the defendant, his agent in London, on the ground that he had not insured his goods according to instructions. The goods consisted of fruit, and no evidence was given to show that any particular instructions had been given as to how or with whom he was to effect the policy. The defendant insured with the London Assurance Office which, in policies on fruit, always put in the exception ‘free " See further, Ivamy, General Principles ofInsurance Law (4th edn, 1979), pp 550-551. ? Similarly, if the agent receives ambiguous instructions and acting bona fide puts on them a reasonable interpretation, he will not be liable for negligence, if it turns out that the instructions were otherwise interpreted by his principal. See e g the judgment of Lord Chelmsford in Irelandv Livingston (1872) LR 5 HL 395 at 416: ‘Now it appears to me that ifa principal gives an order to an agent in such uncertain terms as to be susceptible of two different meanings, and the agent bona fide adopts one of them and acts upon it, it is not competent to the principal to repudiate the act as unauthorised, because he meant the order to be read in the other sense of which it is equally capable. It is a fair answer to such an attempt to disown the agent’s authority, to tell the principal that the departure from his intention was occasioned by his own fault and that he should have given his order in clear and unambiguous terms.’ ’ 3 (1776) 2 Cowp 479. 30 Duty to obey his principal’s instructions 31 from particular average’.* The loss which ensued was not a total loss, for though the goods were at first under water, some were saved. The jury found a verdict for the defendant, and one of the jurymen said that the ground of the verdict was ‘because they thought he had acted bona fide to the best of his judgment’. Lord Mansfield gave judgment accordingly, and ona motion for a new trial his decision was supported by three other Judges. On this motion he himself was present, and explained the reason for his decision and his directions to the jury. He said that the plaintiff, ifhe pleased, might have given orders to the defendant not to insure at the London Assurance Office, but at some other office where the exception concerning fruit would not have been insisted upon. Since he gave no instructions, he left it to the defendant’s discretion, and therefore if the defendant acted bona fide, there was complete freedom to elect between the underwriters. Further, since the premium was the same, there could be no temptation as to his choice between them. A similar case is Comber v Anderson.” This was an action against the defendants, as insurance brokers, respecting a cargo of wheat, which the plaintiff had bought at Waterford to be conveyed by the ship ‘Fanny’ from there to Liverpool. The plaintiff alleged that it was the duty of the defendants to have caused such a policy ofinsurance to be effected on the wheat as would have indemnified him from any partial loss which should or might arise in the event of the ship being stranded. The defendants effected the policy with the Royal Exchange Assurance Co, whose policy contained a clause that the company was to be ‘free from all average upon corn, unless general, or otherwise specially agreed’. No special agreement was entered into by the defendants, and the ship later stranded, and a partial loss was incurred. It appeared that the plaintiffhad not given the defendants any special directions concerning the insurance of the cargo, and he did not complain of the policy having been effected with the Royal Exchange Assurance Co, until some time after the loss had happened. Lord Ellenborough CJ, had no hesitation in giving judgment for the defendants. He said that the plaintiff must be taken to have been cognisant of the existence of the Chartered Companies and the tenor of their policies—matters which since the publication of Park’s book on Insurance® were familiar to all persons in the least degree conversant with these subjects. Ifhe had wished that the policy upon the cargo was not to be effected on the terms offered by the Royal Exchange Assurance Co, he ought to have given special directions to the defendants for this purpose; and at any rate, having been so late in reproaching them for what they had done, he had acquiesced and adopted the policy which they actually effected. It is doubtful however whether Moore v Mourgue’ would necessarily be followed at the present time. No proof was given that the plaintiff, who was a foreigner, was actually acquainted with the difference in the terms offered by the underwriters and those offered by the London Assurance Co, and further it would seem that the agent had not exercised reasonable skill, since he had not insured under a policy which afforded the more complete protection. The principal must be able to rely on the broker carrying out his instructions faithfully, and it is no defence to an action for negligence for the broker to claim 4 As to particular average warranties, see pp 429-432, post. > (1808) 1 Camp 523. © Park JA, A System of the Law of Marine Insurance (1786). 7 Supra. 32 The duties of a broker in effecting the policy that the principal ought to have examined the policy to see that he had gained full protection. In Dickson & Cov Devitt® the plaintiffs instructed the defendant, an insurance broker, to insure goods ‘per steamship ““Suwa Maru” and/or steamers,’ London to Port Dickson’, against marine and war risks. A ‘slip’ in accordar: :e with the instructions was prepared, but the underwriter to whom it was shown would only insure the marine risk, as he was full up with war risks. The defendant’s clerk who was taking the ‘slip’ round, then struck out the words ‘and war’, and prepared another ‘slip’ for the war risk alone, and in doing so he accidentally left out the words ‘and/or steamers’, so that the insurance of the goods against war risk was only on the ‘Suwa Maru’. This ‘slip’ in that form was in due course underwritten by an underwriter. Debit notes were prepared and sent by the defendant to Dickson & Co, the debit note in respect of the marine risk purporting to be on the goods per “Suwa Maru’ and/or steamers, while the note in respect ofthe war risk purported to be on the goods per ‘Suwa Maru’ only. Policies embodying the same distinction followed later. It was the usual practice in Dickson & Co’s office to check the debit notes, when received, with the instructions given to the broker. No one in the office, however, discovered the discrepancy between the instructions and debit note in respect of the war risk insurance. The two debit notes were sent pinned together, and it was suggested that the clerk checked the debit note in respect of the marine risk, which was on the top, and finding that it was all right, made only a cursory examination of the debit note in respect of the war risk. On being sued for negligence, the broker claimed that the plaintiffs were themselves negligent, and that therefore he was not liable, but Atkin J, gave judgment against him. He thought a client was entitled to rely on the insurance broker carrying out his instructions, especially as the client might quite easily overlook a difference which ought to be perfectly plain to a person who had special knowledge of insurance matters. The principal would not know whether the document did, in fact, carry out his instructions. Business could not be carried on, if, when a person had been employed to use skill and care with regard to a matter, the employer was bound to use his own skill and care to see whether the person employed had done what he was employed to do. 2 Duty to use proper skill and care It is the duty of the broker to act with proper skill and care.'° The Courts soon held that it was the duty of the broker to insert all the clauses which were usual and ordinary in the type of voyage concerned. In Mallough v Barber'* the defendants, who were insurance brokers, were sued for negligence in effecting a policy of insurance for the plaintiff. He had instructed them to effect a policy for £550 on the ship ‘Expedition’ and her freight ‘at and from Tenerife to London at 10 guineas per cent’. They effected the policy in the words communicated to them. The ‘Expedition’ took some goods on board at Tenerife, and then proceeded to Lanzarote to complete her cargo. Lanzarote was another island in the Canary 8 (1916) 86 LJKB 315. ° For the meaning of this term, see Marine Insurance Co Ltd v Grimmer [1944] 2 All ER 197, CA. ‘© See further, Ivamy, General Principles ofInsurance Law (4th edn, 1979) spp 991595" '! (1815) 4 Camp 150. Duty to use proper skill and care 33 Group, but not on the direct route to London. The vessel was later captured, and the underwriters naturally refused to pay on the ground of deviation. Lord Ellenborough CJ, gave judgment for the plaintiff, because the defendants had not inserted the usual clauses. A great number of insurance brokers gave evidence to show that where instructions were given to effect insurance ‘at and from Tenerife’, it was the invariable practice, even though no special orders were given, to insert in the policy a clause giving ‘liberty to touch and stay at all or any of the Canary Islands’, because ships seldom loaded the whole of their cargoes at Tenerife, but generally went to some of the other islands to complete their loading. It was naturally vital for the broker to ensure that the commencement of the risk was properly described, for otherwise no money would be recoverable on the policy in the event of loss. This was the question to be decided in Park v Hammond.'* The material facts in this case were that the plaintiff, who was a merchant at Malaga, wrote a letter to the defendant, who was an insurance broker in London, instructing him to insure goods from Gibraltar to Dublin, stating that he would himself take the risk on the goods from Malaga to Gibraltar Bay. The insurance was effected and the clause concerning the commencement ofthe risk was in the common printed form without alteration or addition: ‘beginning the adventure upon the said goods and merchandise from the loading thereof aboard the same ship’. The ship sailed from Malaga, and arrived in Gibraltar Bay, but did not touch at Gibraltar itself because of plague, and went to Algeciras to put letters ashore. She then continued her voyage, and was totally lost off the coast of Ireland. The underwriters refused to pay on the policy, because the risk had not been insured against, so the plaintiff sued the defendant for negligence, and judgment was given for the plaintiff. Gibbs CJ, who decided the case, said that the instructions were abundantly sufficient to show that the goods to be insured from Gibraltar had been loaded at Malaga. It was, therefore, the duty of the defendant to have stated this fact in the policy. It had been settled that a policy on goods ‘beginning the adventure from the loading thereof aboard the said ship’ without any addition, or ‘aboard the said ship as above’ only attached to goods loaded at the port which was the terminus a quo of the risk insured.'* Insurance brokers were bound to know that this was the law, and to act accordingly for the benefit of their employers. They were expected to display competent skill as well as diligence in their business. One of the earliest cases showing the course of a broker’s business at the beginning ofthe nineteenth century is Wake v Atty, ‘4 and here the Court had to consider whether a broker had to be on permanent full-time duty in his office. An underwriter was sued on a policy of insurance, and one ofthe questions to be decided was whether a want ofdiligence on the part of the broker avoided the policy. It appeared that the insurance broker first effected the policy upon the ‘Monarch’ on 15 October in consequence of instructions dated 13 October from Sunderland. He had not, however, completed it until 17 October, on which day 12 (1815) 4 Camp 344. 13 Robertson v French (1803) 4 East 130; Spitta v Woodman (1810) 2 Taunt 416; Horneyer v Lushington (1812) 15 East 46; Mellish v Allnutt (1813) 2 M&S 106. 14 (1812) 4 Taunt 493. 34 The duties of a broker in effecting the policy at about 10 o’clock in the morning he left his house in Southampton Buildings, Chancery Lane, with the policy in his pocket, prepared for the execution by the underwriters, and went to the Royal Exchange where he procured the signature of the Lloyd’s underwriter at about 11 o’clock, without having previously called at an office which he had in the Coal Exchange, and to which letters addressed to him on business were usually directed. It was his habit to go to the Royal Exchange and transact,his business there on the way to his office. On arriving at his office on 17 October, he found there a letter which had come by that morning’s post from his principal at Sunderland written on 15 October and stating that he had received on 14 October from the wife of the master of the ‘Monarch’ a letter, in which her husband stated that the ship had been captured 9 days after leaving Malta on the passage to Gibraltar. In directing the jury Mansfield CJ, left it to them to say whether the broker ought first to have gone to his office and got his letters, and whether the omission was “gross and palpable negligence’ in him. The jury decided that the broker was not negligent, and a new trial was asked for on the ground of misdirection. The underwriter contended that it would open a door to great frauds in the effecting ofpolicies, ifa broker might choose whether he would inspect his advices of the day or not before he transacted his business at Lloyd’s, for in that case where he had reason to expect intelligence of losses, he would effect his insurances without reading his letters. In London, where persons were in the general habit of receiving letters from the country on subjects relating to their business, they ought to look at their letters before they proceeded to transact their affairs. On the other hand, it was maintained that the broker had on 17 October no reason to expect any further instructions relative to the effecting of the policy. It was, therefore, no negligence on his part to proceed to its completion without searching his office for further advices. There was no reason to think the ‘Monarch’ a lost or missing ship. It was unreasonable to say that a merchant or broker must invariably open all his letters of the day, to however remote a part of the town they might be directed, before he could venture to transact any business. Gibb J, saw no grounds for disturbing the verdict of the jury in finding that the broker was entitled to presume that he had all the information on which he was to effect the policy. Mansfield CJ, was of the same opinion, laying stress on the fact that the policy was begun a day or two before the underwriter signed it, and said that it was just by chance that the master ofthe ship happened to write to his wife about the loss, and that she had informed the plaintiff. Effect of illegality of policy It was early realised that a broker sued for negligence in not effecting a policy could plead the defence of illegality. That this might be so can be seen from Webster v de Tastet.'° In this case the plaintiff had been hired to go asa mate ina ship from the coast of Africa to Havana for which he was to receive wages at the rate of £5 per month and three privilege slaves free of expense on the ship arriving at the port of sale. He directed the defendant, who was his agent in Liverpool, to get an insurance effected on the slaves, but he neglected to do so. The defendant contended that the plaintiff could not recover the value of the slaves, because they were not the legal subject of insurance. Counsel for the 'S (1797) 7 Term Rep 157. Duty to use proper skill and care 35 plaintiff admitted that if'a policy had been effected, the plaintiff could not have recovered the value of the privilege slaves in an action against the underwriter, but contended that the plaintiff was entitled to damages because in point of fact these kinds of slaves were frequently the subject of insurance by mates at Liverpool, where the loss was always paid by the underwriters without disputing the question, but the Court of King’s Bench decided against him. The question of partial illegality had to be considered in the later case of Glaser v Cowie’® where the principle on which the case was decided would be equally applicable to brokers. The defendants, who were merchants in London, received from the plaintiffs, who resided and carried on business at Stralaund, a letter dated 20 April 1810, and written by their managing clerk, which gave orders to effect an insurance according to the terms of a memorandum enclosed. The memorandum contained directions for an insurance on goods to the amount of £7,000, and particularly described the adventure to be insured, and said that it was to include loss by British as well as foreign capture, and at the conclusion (in a postscript written in German) it contained these words: ‘Observe the premium on this value is also to be insured.’ At the time of the receipt of this letter and its enclosure, the defendants also received another letter from the plaintiffs, enclosing a duplicate of the above memorandum, dated 23 April, and written by the same person as the former, in which he wrote thus: ‘I confirm all what I said belonging to the insurance, and send you to-day the note in English to avoid all misunderstanding. I added British capture, though I know it is not lawful, but hope you will take care for an insurer with whom a policy of honour may be trusted as good and lawful.’ The defendants upon the receipt of these letters effected an insurance in general terms against loss or capture by any power whatsoever, on the sum of £7,000, but not on the premium. It was objected by the defendants that the order for the insurance was illegal inasmuch as it contained a direction to include loss by British capture, and therefore could not be made a ground of action against the defendants for not complying with it. The jury gave the verdict for the plaintiffs. On appeal the order for a new trial was refused. The case was heard before Lord Ellenborough QJ, who had presided at the Court of trial at Guildhall. He and the other Judges of the King’s Bench were of the opinion that this omission was certainly a slip of the defendants, which probably arose from the direction respecting the insurance of the premium being in a foreign language, and occurring in a few words at the end of a letter of considerable length. But still, as the first letter contained a specific direction which was confirmed by the subsequent letter, the defendants were bound to attend to it. It was true that the plaintiffs said in their second letter that they added British capture, though they knew it was not lawful, but it was not a crime to insure against British capture, so as to make the whole policy illegal and void, as the Court seemed to have thought in Lubbock v Potts,'’ though perhaps such insurance would have been void pro tanto. In this respect the defendants conducted themselves with adroitness by effecting an insurance in general terms which would be construed to extend to such captures only as they might lawfully insure against. 16 (1813) 1 M&S 52. 17 (1806) 7 East 449. 36 The duties of a broker in effecting the policy Position where policy ts void The position where the broker has effected a void policy was considered in T Cheshire & Co v Vaughan Bros & Co.'8 The plaintiffs were Liverpool warehousemen, who used to receive cargoes of nitrate for warehousing at three ports. The trade at that time was under the control of the Government, so that ships which started for a particular port might be diverted to other ports or other countries. The warehousemen desired to insure the profits which they expected to make from the nitrate coming to their warehouse, by insuring the non-arrival of the ship by reason of her diversion in such an event. They accordingly gave the defendants, a firm of brokers, instructions to effect policies which would cover this loss. In view of the difficulty of proving the actual loss, because, when they knew the ship was not coming, they would naturally endeavour to fill the vacant space in their warehouse with other goods, and a somewhat complicated question might arise as to the amount of the loss, they intended that their policies should have on them a ppi clause whereby the mere production of the policy would be evidence ofinterest to the full amount mentioned in the policy. The ship was diverted to Italy for economic reasons, and because full disclosure of the nature of the special risk had not been made to them, the underwriters refused to pay on the policy.'? The plaintiffs thereupon sued the brokers for negligence. The defence raised was that they were not entitled to recover any damages, because the ppi policy was void under the Marine Insurance Act 1906, s 4,7° and this contention was upheld by the Court of Appeal. Scrutton LJ, observed that even if the contract were null and void, the strong probability was that, except for the defendants’ negligence in not disclosing the risk, the plaintiffs would have recovered on the policy, as the underwriters would not have taken objection to the p pi clause. Nevertheless, in his view, the principle on which the case should be decided was that a contract, which was declared by the law to be null and void, could not be either directly or indirectly the basis of a legal claim. The Court left open the question whether such a contract might also be void on the ground ofpublic policy. Bankes LJ, observed that it might be that the making ofa p pi policy was against public policy in spite of the change that had been introduced by the repeal of the Marine Insurance Act 1745, which made such an assurance illegal, and the substitution of the Marine Insurance Act 1906, s 4, which merely made it void as a gaming and wagering contract, because the main evil which it was intended that the earlier Act should deal with as recited in the preamble was as great when the "8 [1920] 3 KB 240. ' Cheshire v Thompson (1919) 24 Com Cas 114 at 198. 2° Section 4 states: : (1) ‘Every contract of marine insurance by way of gaming or wagering is void. (2) A contract of marine insurance is deemed to be a gaming or wagering contract— (a) where the assured has not an insurable interest as defined by this Act, and the contract is entered into with no expectation of acquiring such interest; or (6) where the policy is made “‘interest or no interest”’; or “without further proof ofinterest than the policy itself”’; or “without benefit of salvage to the insurer” or subject to any other like term: Provided that where there is no possibility of salvage, a policy may be effected without benefit of salvage to the insurer.’ Duty to use proper skill and care 37 Act of 1906 was passed as it was in 1745. It might to some extent have changed its form, but the evil was the same evil, and the mere alteration of the language of the statute could not be readily accepted as indicating an alteration in the view of the legislature in reference to such a contract.! 3 Duty to carry out the transaction” It was settled in Smith v Lascelles* that a broker could not be compelled by the principal to effect an insurance. é But Ashurst J, stated that if directions were given to a person to whom the application would be made in the usual course of business, and he did not give notice ofdissent, he would probably be answerable for negligence, because he had deprived the other of any opportunity of applying elsewhere to procure the insurance. An illustration of this rule is provided by Corlett v Gordon.* The plaintiff, being at Paramiribo in South America, enclosed a bill of lading in respect of some cotton addressed to the defendants, who were merchants in London, requesting them to effect an insurance to the full amount. The defendants had not done business with the plaintiffbefore, and had not promised to act as his consignees. For some reason they wished to decline to do so, and on receiving the bill of lading, they endorsed it over to one Major, a friend and creditor of the plaintiff. Major effected the insurance and received the goods, which never came into the possession of the defendants. Major afterwards became insolvent with the proceeds in his hands. The plaintiff claimed the value of the goods, and judgment was given for him. Lord Ellenborough CJ, remarked that the defendants had no right to endorse the bill of lading. They could not devolve on another person the authority conferred upon them, and turn over the property to a stranger. It was difficult to say what they ought to have done; but he was quite clear that they were not justified in doing what they did. They could elect either to take or reject the bill of lading. If they took it, they were bound to take it according to the terms of the consignment by which they themselves were bound to insure and sell the goods. They appeared to have acted with a good conscience, but they were not correct in point of law. If the broker cannot get the insurance effected in the usual way, is he bound to take any further steps to carry out his principal’s instructions, and will he be liable if a loss results? This question came before the Court in Smith v Cologan.° Strictly speaking, this case concerns insurance agents, but the principle would be equally applicable to brokers. This was an action on the case for neglecting to effect an insurance on goods. The defendants, who were the correspondents ofthe plaintiffs, sent their broker, one Anderson, to Lloyd’s Coffee House to get their orders effected. Anderson could not get the policy underwritten at the 1 But see Re London County Commercial Reinsurance Office Ltd [1922] 2 Ch 67, where it was held that ppi policies were merely void, and that when the liquidator of the insuring company repudiated liability, the premium must be returned to the assured. 2 See further, Ivamy, General Principles of Insurance Law (4th edn, 1979), p 550. 3 (1788) 2 Term Rep 187. 4 (1813) 3 Camp 472. > (1788) 2 Term Rep 188n. 38 The duties of a broker in effecting the policy premium of 5 to 6 guineas per cent which he offered. This was not because the premium offered was too low for such a risk, but because the underwriters would not engage in the risk at all on account of the ship not being registered at Lloyd’s. Buller J, considered it immaterial to consider whether the defendants ought to have approached the Public Offices, ie the two Chartered Companies, because they went further in their quest for underwriters and their acts were adopted by the plaintiffs. The next step they took was to write to GK & Co, who were the shipowners living at Newcastle, thinking them the most likely persons to get the insurance effected, which they accordingly did. When the loss became known, the defendants endeavoured to get the policy out of the hands of GK & Go, and they applied repeatedly, but could not succeed. GK & Co maintained that they had other sums to recover on the same policy, and, therefore, could not let it go out of their hands. The only way in which the defendants might have recovered the policy was by bringing an action, and the Judge considered that their failure to do so did not constitute negligence. Later the matter was discussed at a meeting between the defendants and one of the plaintiffs who approved of their conduct, and considered Anderson as his agent. In these circumstances judgment was given for the defendants. The decision appears unsatisfactory for two reasons. First, it leaves open the question whether the defendants would have been guilty ofa breach of duty in approaching GK & Co at all in the event of non-ratification, and secondly, there is no evidence to show that the plaintiff who approved of the defendant’s actions had the authority of the other plaintiffs to do so. In some circumstances, a broker would be bound to effect the insurance if required to do so by a person residing abroad. Once more the case relates strictly to insurance agents, but is equally applicable to brokers. In 1786 Buller J, in Wallace v Tellfair® ruled that where a merchant residing in this country had accepted an order for insurance, and limited a broker to too small a premium in consequence of which no insurance could be procured, he was liable to make good the loss to the foreign merchant. The same Judge enlarged on this principle 2 years later in Smith v Lascelles’ in which he said that there were three instances in which such an order must be obeyed. First, where a merchant abroad has effects in the hands ofhis correspondent here, he has a right to expect that he will obey an order to insure, because he is entitled to call his money out of the other’s hands when and in what manner he pleases. Secondly where the merchant abroad has no effects in the hands of his correspondent, yet if the course of dealing between them be such that the one has been used to send orders for insurance, and the other to comply with them, the former has a right to expect that his order for insurance will still be obeyed, unless the latter gives him notice to discontinue that course of dealing. Thirdly, if the merchant abroad sends bills of lading to his correspondent here, he may engraft on them an order to insure as the implied condition on which the bills of lading shall be accepted which the other must obey, if he accepts them, for it is one entire transaction.® © (1786) 2 Term Rep 188n. 7 (1788) 2 Term Rep 187. 8 See Callender v Oelrichs (1838) 5 Bing NC 58. CHAPTER 6 Non-disclosure! In his book on ‘Marine Insurance’ Park said: ‘Insurance is a contract of speculation. The facts upon which the risk is to be computed, lie, for the most part, within the knowledge of the assured only. The underwriter must therefore rely upon him for all necessary information; and must trust to him that he will conceal nothing, so as to make him form a wrong estimate. If a mistake happens, without any fraudulent intention, still the contract is annulled, because the risk is not the same which the underwriter intended. Good faith forbids either party by concealing what he privately knows to draw the other into a bargain from his ignorance of the fact and his belief to the contrary.’ In the Marine Insurance Act 1906 the duty of good faith is expressed in s 17 in the following terms: ‘A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party.’ Section 17 of the Act restates the long established duty of the utmost good faith in contracts of marine insurance. It is not necessary, even if it were possible, to go into degrees of good faith or the question what degree of good faith may apply to other contracts. It is enough that much more than an absence ofbad faith is required ofboth parties to all contracts of insurance. The general principle is stated ins 17 because the special sections which follow are not exhaustive. The sections concerned must be read in the light of 17 and all their references to insurer and assured follow the statutory duty of utmost good faith on each party.” A DUTY TO DISCLOSE MATERIAL 1 Disclosure by the assured himself FACTS Section 18(1) of the Marine Insurance Act 1906 states: ‘Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him. Ifthe assured fails to make such disclosure, the insurer may avoid the contract.” ' See further, Ivamy, General Principles of Insurance Law (4th edn, 1979), pp 132-170. 2 Container Transport International Inc and Reliance Group Inc » Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 at 525, CA (per Stephenson LJ), where the learned Lord Justice quoted with approval the statement in Chalmers’ Marine Insurance Act 1906 (9th edn, by E R Hardy Ivamy, 1983), p 24. The obligation of utmost good faith continues after the execution of the contract: Black King Shipping Corpn v Massie, The Litston Pride (1984) Times, 17 December, QBD (Com Ct), where the duty of good faith was held to apply to the requirement to give notice to the insurers under the war risk trading warranties and to the making of claims. 39 40 Non-disclosure Section 18(2) goes on to provide: insurer in ‘Every circumstance is material which would influence the judgment of aprudent fixing the premium, or determining whether he will take the risk.’ It is to be emphasized that not only must material circumstances known by the assured be disclosed but also material circumstances which he is deemed to know. Thus, in Berger and Light Diffusers Pty Ltd v Pollock? the fact that a bill of lading in respect of some steel injection moulds was ‘claused’ in that it stated that the moulds were ‘unprotected’, ‘secondhand’ and ‘insufficiently packed’ was deemed to be known to the assured, for it was known by their shipping agents.“ The non-disclosure may be either fraudulent or innocent, ie the information may be designedly withheld, or the party not making the disclosure may regard it as unimportant and not necessary to be disclosed. But in each case the result is the same. The contract is voidable at the option of the insurer. The wider the risk the greater the burden on the assured to make full disclosure of material circumstances. A policy ‘on ship or ships’, or ‘on steamer or steamers’, or a policy on goods with an indorsement of different lines of steamers on which the goods insured may be carried, requires greater care on the part of the assured than a policy on goods to be shipped on a named ship. His duty in both cases is the same, but the possibility of innocent non-disclosure is much greater in the one case than in the other. Mere disclosure of part of the information will not avail the assured if that which remains undisclosed is found to be material.° The same principle applies to contracts of reinsurance. Thus, in China Traders: Insurance Co v Royal Exchange Assurance Corpn® Vaughan Williams LJ, said: ‘A reinsurer is himself an assured who takes upon himself, not only before but after the contract comes into operation, to act with the greatest good faith.’ All information with regard to material facts which have been received must be disclosed, even if there are good grounds for doubting the correctness of the information. It is no defence to say that the source of the information was unreliable, nor will the assured be protected if the information turns out in the event to be untrue. His duty is to disclose the facts and their source, and to leave the underwriter to form his own opinion as to the correctness of the report, and its effect on the proposed contract. Thus, in De Costa v Scandret® Lord Macclesfield LC, said: ‘The insured has not dealt fairly with the insurers in this case; he ought to have disclosed to them what intelligence he had ofthe ship’s being in danger, and which might induce him at least to fear that it was lost, though he had no certain account of it.’ Similarly, in Lynch v Hamilton? Sir James Mansfield CJ, said:!° > [1973] 2 Lloyd’s Rep 442, QBD, Com Ct. * See the judgment of Kerr J, ibid, at 461. Kirby v Smith (1818) 1 B&Ald 672; Westbury v Aberdein (1837) 2 M&W 267. [1898] 2 OB 187. Ibid, at 193. (1723) 2 P Wms 170. mnrir nw © (1810) 3 Taunt 37. -° Ibid, at 44. See also, Lynch v Dunsford (1811) 14 East 494; Seaman-v Fonereau (1743) 2 Stra 1183; Morrison v Universal Marine Insurance Co (1873) LR 8 Exch 197. Duty to disclose material facts 41 ‘I cannot distinguish this from the case of Seaman v Fonereau,'' where a letter received stated that the vessel insured had been seen in the night leaky, and had disappeared the next day, and though that rumour was false, inasmuch as the ship kept her course and was afterwards captured, it was held that for want of that disclosure the underwriters were not liable.’ The existence of an open cover between the assured’s brokers and the insurers does not relieve the assured of his duty under s 18(1) to disclose material circumstances which are known to him.‘ 2 Disclosure by agent effecting insurance The duty of making a full disclosure of material circumstances lies on the assured, whether the insurance is effected by himself or by an agent.'* The agent must be as diligent in disclosure as his principal, and all persons are connecting links—either as owners or agents—between the thing insured and the insurer, and must pass their knowledge from one to another with the utmost assiduity until the information reaches the insurer. There may only be the owner contracting directly with the insurer; there may be the owner and his broker, or the shipping agent, owner and broker, and the chain may include the master of the ship. The failure of any of these to do his duty may involve non-disclosure of a material fact caused either by the owner directly, or by an agent for whose acts or omissions he is responsible. Neither fraud nor neglect on the part of any agent will or ought to excuse the principal, who will be held responsible for his representatives in this respect. If the law were otherwise, the door would be open to dishonest practices of the worst kind.'* Section 19 of the Marine Insurance Act 1906 states: ‘Subject to the provisions of the preceding section as to circumstances which need not be disclosed, where an insurance is effected for the assured by an agent, the agent must disclose to the insurer— a every material circumstance which is known to himself, and an agent to insure is deemed to know every circumstance which in the ordinary course of business ought to be known by, or to have been communicated to, him; and b every material circumstance which the assured is bound to disclose, unless it come to his knowledge too late to communicate it to the agent.’ Some agents so far represent the principal that in all respects their acts and intentions and their knowledge may truly be said to be the acts and intentions and the knowledge of the principal. An early Scots case in 1785 indicates that when a clerk of the assured knew that a loss had occurred, his knowledge was deemed to be that of the principal.'* Again, in 1813 in Gladstone v King'® the master ofaship was considered to be under a duty to communicate information about damage she had sustained. Similarly, in 1867 in Proudfoot v Montefiore,'’ * (1743) 2 Stra 1183. 12 Berger and Light Diffusers Pty Ltd v Pollock [1973] 2 Lloyd’s Rep 442, QBD (Com Ct). (See the judgment of Kerr J, ibid, at 460.) 13 See further, Ivamy, General Principles of Insurance Law (4th edn, 1979), pp 579-583. 14 Fitzherbert v Mather (1785) 1 Term Rep 12; Proudfoot v Montefiore (1867) LR 2 QB 511; Stribley v Imperial Marine Insurance Co (1876) 1 QBD 507; Blackburn, Low G Co v Vigors (1887) 12 App Cas 531. 1S Stewart v Dunlop (1785) 4 Bro Parl Cas 483, HL. 16 (1813) 1 M&S 35; Stribley v Imperial Marine Insurance Co (1876) 1 QBD 507. : 17 (1867) LR 2 QB511. See also, Fitzherbert v Mather, supra; Bolivia Republic v Indemnity Mutual Marine Assurance Co Ltd [1909] 1 KB 785. 42 Non-disclosure where the general agent of a shipowner knew that the ship was lost and purposely refrained from communicating with the owner until the latter had effected the insurance, his guilty knowledge was considered to be that of his employer. In Bolivia Republic v Indemnity Mutual Marine Assurance Co Ltd'® a cargo was insured for a voyage up the Amazon from Para to Puerto Alonzo and/or other places on the River Acre and in that district. It consisted of stores for the Bolivian Government troops, who were in that area for the purpose ofresisting an expedition which was seeking to overthrow the Government and establish a republic. The cargo was seized when the vessel was intercepted by the expedition. The agent of the insured knew that the expedition was actually being fitted out for the purpose ofintercepting the cargo, but did not disclose this fact to the insurers when effecting the policy. Pickford J, held that the fact was material, and that since it had not been disclosed, the insurers were entitled to avoid liability under the policy. He observed:*? “The fact that an expedition was actually at that moment being fitted out for the very purpose ofintercepting the goods shipped by the Bolivian Government upon the Labrea, it seems to me, must be material to the mind of anybody who was considering whether he would effect an insurance upon these goods. It may be that the insurer ought to be taken to have had knowledge ofthere being disturbances in the territory of Colonias or E] Acre—I do not decide, but I will assume that. But even assuming he had, it seems to me that the additional fact that there was at that moment an expedition fitting out for the purpose ofintercepting the goods was an additional fact which he cannot be taken to have had knowledge of, and a very material fact. I have had evidence that it was material; and I agree that it was a most material fact to be disclosed.’ His Lordship also considered the situation which arose under an open cover which could be used for the goods of different owners, and said:*° ‘It seems to me if a person opens a cover which may be used for the goods ofdifferent owners, and he knows facts which are material to the insurance ofthe goods ofone and not material to the insurance of the goods of another—though possibly when he declares the goods to which the facts are not material, it may not be necessary for him to disclose these facts which are material to the goods of the other—as soon as he uses that cover for the purpose ofinsuring goods, to which the facts he knows at the time ofopening the cover are material, it is his duty to disclose them, and he cannot say that the first declaration he made upon the cover was in respect of goods to which the facts are not material, and as the date ofthe initialling ofthe slip has to be looked at as the date at which the concealment must take place to avoid the policy when goods are afterwards declared upon it, to which the facts are material, he is not bound to disclose them, and his policy is not void.’ But to lay down an abstract proposition of law that every agent, no matter how limited the scope of his agency, would bind his principal by his acts is on the face of it absurd. The nature of the agency must be such as to place the agent under a duty to communicate the information to his principal. Accordingly, in Wilson v Salamandra Assurance Co of St Petersburg’ it was held that members of Lloyd’s were not affected by information contained in surveys by Lloyd’s agents abroad. ‘8 (1908) 99 LT 394, KBD. ‘9 Ibid, at 398. 20 Tbid, at 398. ' (1903) 88 LT 96. Duty to disclose material facts 43 In Blackburn Low & Co v Vigors* the plaintiffs instructed a broker to insure an overdue ship. Whilst acting for the plaintiffs, the broker received information material to the risk and did not communicate it to them, but no policy was actually effected by him. Later the plaintiffs gave instructions to another _broker, who effected the policy with the defendant. Both the plaintiffs and the second broker acted in good faith, and the question was whether the knowledge of the first broker would affect the policy and enable the defendant to treat it as voidable. The House of Lords decided that the policy was not vitiated on the ground that the first broker was not one of those agents whose duty it was to give information to the principal. The basis for the decision was that the responsibility of an innocent assured for the non-communication offacts which happened to be within the private knowledge of persons whom he merely employed to cbtain an insurance on a particular risk ought not to be carried beyond the person who actually made the contract on his behalf. Lord Watson considered that there was no authority whatever for enlarging his responsibility beyond that limit, unless it were to be found in the decisions relating to captains and ship’s agents; and these cases did not appear to him to have any analogy to the case of agents employed to effect a policy. He considered that there was a material difference in the relations of those two classes of agents to their employer. The one class was specially employed for the purpose of communicating to him the very facts which the law required him to divulge to his insurer, the other was employed not to procure or furnish information concerning the ship, but to effect an insurance. There was also an important difference in the position of those two classes with respect to the insurer. He was entitled to contract, and did contract on the basis that all material facts connected with the vessel insured known to the agent employed for that purpose had been communicated by him in due course to his principal. So also when an agent to insure was brought into contact with an insurer, the latter transacted on the footing that the agent had disclosed every material circumstance within his personal knowledge, whether it was known to his principal or not; but it could not be reasonably suggested that the insurer relied to any extent on the private information possessed by persons of whose existence he presumably knew nothing. But the opposite conclusion was reached on the facts of acase decided in the next year by the Divisional Court,—Blackburn v Haslam?—and with good reason. In this case a firm of underwriters endeavoured to effect a reinsurance policy on an overdue ship, and gave instructions to some Glasgow brokers to that effect. The Glasgow brokers wired to their London agents to insure at a rate which their principals had named. While the negotiations were going on, the Glasgow brokers received information that the ship, the subject of the insurance, had been lost. But such information was given in confidence, and for that reason was not communicated to their principals. The principals afterwards effected the reinsurance through the London agents of the Glasgow firm. It was held that there had been merely a handing over ofthe negotiations by the Glasgow brokers to their principals, and, therefore, the non-disclosure by the Glasgow brokers of the loss of the ship was non-disclosure by their 2 (1887) 12 App Cas 531, HL. 3 (1888) 21 QBD 144. See also, Webster v Foster (1795) 1 Esp 407. 44 Non-disclosure principals, and the reinsurance was voidable at the instance of the reinsurers. Pollock B, declared that ifthe view which the court had taken ofthe facts and of the law which arose out of them were the true view, his judgment in no way conflicted with the decision in Blackburn Low & Co v Vigors.* Although the opinion was expressed in that case that it was not the duty of the agents to communicate to their principals the information which they had received, he considered that opinion as applying to the particular facts before the House which showed that before the negotiations for the policy sued upon had commenced, all connection of the plaintiff with his former brokers had ceased. He could not suppose it would be intended to apply to the facts proved in the present case, which showed that so far from the connections between the principals and their agents ceasing, the brokers used the name ofthe principals to continue the negotiations, and the principals adopted the act and themselves continued and carried out what their brokers had commenced. Ifa material circumstance comes to the knowledge of the assured soon after he has given instructions to effect an insurance, it becomes his duty to communicate at once with his broker in order that the new fact may be laid before the insurer. The assured is under a duty to use the same diligence in relieving the insurer of an increase in the risk as he would employ to procure a lower rate or premium if the new fact would entitle him to stipulate for a reduction. | If news ofloss has reached him, he must communicate his news to the insurer with as much alacrity as he would display in countermanding the insurance if | he heard of the safe arrival of the vessel and the consequent termination of the _ risk.° | Whether the material circumstance comes to the assured’s knowledge too late to communicate it to the agent is, of course, a question of fact.° | B THE TEST OF MATERIALITY The test ofmateriality is laid down bys 18(2) of the Marine Insurance Act 1906 | which states: , ‘Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.’ In some cases the premium paid is an index to the nature of the risk which was assumed by the insurer, and may be of assistance in determining whether the fact in question was disclosed or not.’ The meaning of the term ‘prudent insurer’ was considered by Atkin J, in Associated Oil Carriers Ltd v Union Insurance Society of Canton Ltd.® In this case the a 4 Supra. ey Fitzherbert v Mather (1785) 1 Term Rep 12; Proudfoot v Montefiore (1867) LR 2 QB 511; London General Insurance Co v General Marine Underwriters’ Association [1921] 1 KB 104. Container Transport International Inc and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476, CA, where it was held that it was not too late for the assured to have communicated their knowledge ofthe figures relating to a previous claim. (See: the judgment of Parker LJ, ibid, at 518.) Bridges v Hunter (1813) 1 M&S 15; Simeon v Bazett (1813) 2 M&S 94; Freeland v Glover (1806) 7 East 457; Mackintosh v Marshall (1843) 11 M&W * [1917] 2 KB 184. 116. The test of materiality 45 question was whether it was material on 31 July 1914 to disclose the fact that the charterers of a vessel were of German nationality. This fact had been held material in British and Foreign Marine Insurance Co Ltd v Samuel Sanday & Co,? which had been decided by the House of Lords in 1916, but his Lordship observed :'° ‘{Counsel] said that a prudent insurer within the meaning ofthe section must be taken to know the law as laid down in Sanday’s case. Knowing so much, he would clearly have been influenced. I think that this standard of prudence indicates an insurer much too bright and good for human nature’s daily food. There seems no reason to impute to the insurer a higher degree of knowledge and foresight than that reasonably possessed by the more experienced and intelligent insurers carrying on business in that market at that time. The evidence satisfies me that if the standard ofprudence is the ideal one contended for by [Counse}], there were in July 1914, no prudent insurers in London, or if there were, they were not to be found in the usual places where one would seek for them.’ The word ‘influence’ ins 18(2) means that the disclosure is one which would have had an impact on the formation of the insurer’s opinion and on his decision-making process in relation to the matters covered by that subsection.** In determining whether there has been a non-disclosure within the meaning of the sub-section the yardstick is the prudent insurer and not the particular insurer.'? There is no requirement that the particular insurer should have been induced to take the risk or charge a lower premium than he would otherwise have done as a result of the non-disclosure.** The Court cannot choose one prudent insurer rather than another. The very choice ofa prudent insurer as the yardstick indicates that the test intended is one which can sensibly be answered in relation to prudent insurers in general. It is possible to say that prudent insurers in general would consider a particular circumstance as bearing on the risk and exercising an influence on their judgment towards declining the risk or loading the premium. '* C CIRCUMSTANCES WHICH NEED NOT BE DISCLOSED Section 18(3) of the Marine Insurance Act 1906 states: ‘In the absence of inquiry the following circumstances need not be disclosed, namely: a any circumstance which diminishes the risk; 6 any circumstance which is known or presumed to be known to the insurer. The insurer is presumed to know matters of common notoriety or knowledge, and matters which an insurer in the ordinary course of his business, as such, ought to know; ¢ any circumstance as to which information is waived by the insurer; d any circumstance which it is superfluous to disclose by reason of any express or implied warranty.’!° ° [1916] 1 AC 650, HL. 10 11917] 2 KB 184 at 192. ‘1 Container Transport International Inc and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 at 492, CA (per Kerr LJ). 12 13 14 15 Tbid, at 510 (per Parker LJ). Tbid, at 510 (per Parker LJ). Tbid, at 511 (per Parker LJ). As to warranties, see pp 280-314, post. 46 Non-disclosure 1 Facts tending to diminish the risk In Carter v Boehm'® Lord Mansfield illustrated this point when he said:"’ ‘The underwriter need not be told what lessens the risque agreed and understood to be run by the express terms of the policy. ... If he insures for three years, he need not be told any circumstance to shew it may be over in two; or if he insures a voyage, with liberty ofdeviation, he need not be told what tends to shew there will be no deviation.’ 2 Facts within the actual or presumed knowledge of the insurer The insurer is presumed to know and to contract with reference to every trade usage which may operate on the subject-matter of the insurance. Thus, the assured is under no duty to disclose: i ii iii iv v The mode of loading at the ports mentioned in the policy.'® The mode of unloading at the port of destination.*? That stowage on deck may in certain cases be in accordance with the usage of the trade.”° The general nature and circumstances of the branch oftrade to which the policy relates.’ Thecourse ofthe old East India Trade, the terms of the charter-party, and the destination of India ships.” Even if the trade is newly established, the usages are presumed to be known. to the insurer.* The insurer is also presumed to know that war is imminent,* or that a state of war exists in some remote part of the globe.° | A reinsurer is presumed to know that the original insurance policy may contain a ‘continuation’ clause.° It would, however, seem that the facts of which knowledge is presumed must | be of recent date, for it has been held that previous knowledge ofamatter which was at one time notorious does not relieve the assured from referring to it and recalling it to the mind of the insurer, if it is material.’ | In Bolivia Republic v Indemnity Mutual Marine Assurance Co Ltd,® which concerned a cargo insured for a voyage up the Amazon, Pickford J, assumed but did not decide that the insurers ought to have had knowledge of there being disturbances in the territory of Colonias or El Acre, near where the goods were being carried.” ‘© (1766) 3 Burr 1905. ‘7 Tbid, at 1910. "8 Moxon v Atkins (1812) 3 Camp 200. "9 Stewart v Bell (1821) 5 B& Ald 238; Gould v Oliver (1837) 4 Bing NC 134. 2° Da Costa v Edmunds (1815) 4 Camp 142. Vallance v Dewar (1808) 1 Camp 503; North British Fishing Boat Insurance Co Ltd v Starr (1922) 13 LIL Rep 206. Salvador v Hopkins (1765) 3 Burr 1707; Grant v Paxton (1809) 1 Taunt 463. Noble v Kennoway (1780) 2 Doug KB 510 at 512; Ougier v Jennings (1800) 1 Camp 505n. Planché v Fletcher (1779) 1 Doug KB 251. wn WN Schloss Bros v Stevens [1906] 2 KB 665; Bolivia Republic v Indemnity Mutual Marine Assurance Co [1909] 1 KB 785. Charlesworth v Faber (1900) 5 Com Cas 408. Bates v Hewitt (1867) LR 2 QB 595. (1908) 99 LT 394, KBD. Ibid, at 398. a oor Circumstances which need not be disclosed 47 In Cantiere Meccanico Brindisino v Janson,*° which concerned the insurance of a floating dock for a voyage from Avonmouth to Brindisi, Buckley LJ, said that the insurers must be presumed to know that a dry dock was not an ocean-going craft, and that unless she had been built with a view to or had been strengthened for a voyage, she was not seaworthy.'? An insurer is not deemed to know the contents of a casualty slip relating to a vessel which at the time he receives the information would have had no interest to him at all.'* Thus, in London General Insurance Co Ltd v General Marine Underwriters’ Association Ltd'* the plaintiffs on 24 September insured ‘lost or not lost’ the cargo of a vessel which was on a voyage from Italy to the United Kingdom. On the evening of that day she put into port with her cargo on fire. Notice ofthe fire was posted on the casualty board at Lloyd’s on 25 September at 10 am. At about 4 pm on that day the plaintiffs effected a reinsurance policy on the cargo ‘lost or not lost’ with the defendants. Neither the plaintiffs nor the defendants knew of the casualty at the date of effecting the reinsurance. The plaintiffs claimed for a loss under the reinsurance policy, but the defendants contended that the occurrence of the fire should have been disclosed to them, and that consequently they were not liable. The plaintiffs, however, maintained that since the defendants ought to have known in the course of their business the contents of casualty slips, this was a circumstance which they were not bound to communicate to them. The Court of Appeal’* 14 held that the defendants were not deemed to know the contents of casualty slips about a vessel which, at the time they received the information, would have had no interest to them at all, and that therefore the plaintiffs’ contention failed. Lord Sterndale MR, said:'> ‘There remains another point, and that is this: It is said that if that is true ofthe plaintiffs, it is equally true of the defendants, and, as they ought to have known in the course oftheir business the contents ofthe casualty slips, it was a circumstance which the plaintiffs were not bound to communicate to them. The learned Judge has taken the view—again I do not see my way to differ from it—that the defendants were not upon the risk in the Vigo. I think that is right, and he has then taken this—that you could not expect the defendants, supposing they had looked at the casualty slips, to have present to their minds always the information about a vessel which at the time they got the information, if they did get it, would have had no interest to them at all.’ In North British Fishing Boat Insurance Co Ltd v Starr‘® an insurance company claimed on a reinsurance policy in respect of a motor fishing vessel which was destroyed by fire. The reinsurer refused to pay the claim on the ground that the company had not disclosed a material fact,'’ viz that there had been an exceptional increase in the number and amount of fire losses among motor fishing vessels insured by the company. ON (1912). 107 LT 281, GA. ‘) Tbid, at 287. . 12 London General Insurance Co Ltd v General Marine Underwriters’ Association Ltd (1920) 124 LT 67, CA. 13 (1920) 124 LT 67, CA. 14 Lord Sterndale MR, Warrington and Younger LJJ. *S (1920) 124 LT at 70. 46 (1922) 13 LIL Rep 206, KBD. 17 The evidence as to materiality is set out ibid, at 206-209. 48 Non-disclosure Rowlatt J, held that the defence failed because under s 18(3)(b) of the Marine Insurance Act 1906 the assured was under no duty to disclose facts which the insurer knew or ought to know. In the present case the reinsurer ought to know the losses which were taking place in motor fishing vessels. His Lordship observed :'® ‘T must look at the underwriter in this case as a person doing the business ofinsuring ships and as necessarily conversant with the course 6flosses affecting particular classes of ships. What he is not bound to know in the ordinary course of his business are particular circumstances specially affecting ships or lines of ships, and specially affecting some limited number ofships. In myjudgment this action must succeed and the defence fails, because I think that whether motor boats fishing round the coast of England as a whole are or are not suffering losses making a particular premium worth while taking is a matter which the underwriter ought to find out, or is supposed to know, because it is his business to know that class of thing, and, therefore, the assured is not bound to go into these matters or disclose these matters when he comes with his business.’ In George Cohen, Sons & Co v Standard Marine Insurance Co Ltd‘? an obsolete battleship was insured whilst being towed from Chatham to Brake (in Germany) where she was to be broken up. She went ashore off the Dutch coast. The insurers sought to avoid liability on the ground that the assured had failed to disclose a material fact, ie that the vessel would have no steam power with which to assist her steering gear. It was held in the King’s Bench Division that there was no need for the assured to disclose the fact, for it was a matter of common notoriety that vessels of this type were sent to sea in this condition. Roche J, said:?° ‘Here, having regard to the evidence as to the frequency with which vessels of this character, dismantled warships, are sent to sea without any steam at all, and having regard to the knowledge that the underwriters certainly had that the vessel was not going to have steam for the main purposes of the voyage and for propulsion, I think it was a matter which they must have known, or must be presumed to have known. Whenever one of these vessels goes to sea, and apparently their number has been considerable, casualties have been not unknown, and, apparently also from the evidence before me, underwriters have interested themselves in these matters. I think they must be presumed or taken to have known that a vessel such as this, at any rate, might be going to sea in the condition in which the Prince George went to sea. In those circumstances the inference that I draw is that they waived—they asked about a good many of the things—disclosure of any further facts as to what was proposed to be done with regard to the Prince George before she went to sea.’ One of the issues‘ in Piper v Royal Exchange Assurance” was whether the insurers should have known any facts material to the actual value ofayacht, which was excessively overvalued to the knowledge of the assured. When she was damaged by fire, the insurers sought to disclaim liability on the ground that the assured was guilty of non-disclosure of material facts, but the assured contended that he was excused from disclosing them Insurance Act 1906. * by reason of s 18(3)(b) of the Marine ‘8 Tbid, at 210. "9 (1925) 21 LIL Rep 30, KBD. © Tbid, at 38. " Another issue was whether the assured knew that the yacht was excessively overvalued. As to this aspect of the.case, see pp 61-62, post. (1932) 44 LIL Rep 103, KBD. i Circumstances which need not be disclosed 49 RocheJ, held that the facts were not deemed to be known to the insurers, and that the assured’s contention failed. He observed:* ‘With regard to that, various comments have been made, and perhaps I have made some of them, on the organisation of the defendant’s business. The fact is that some things are known to one department which are not known to another, and some things were not known to people who were underwriting the later insurance which might well, under a better business organisation—which, I understand has now been introduced—have been known to them, but they were not the facts which I have found ought to have been the subject-matter ofdisclosure on this occasion. They knew from the reports which they had received both from the voyage damage and in respect of the stranding damage that there were defects in this ship which would affect her value. Ofcourse, she was not valued at the value ofa new ship, which would be many times more than £2,500, and there was little to show that a number, at any rate, of those defects of which they had been made aware were not remedied by subsequent repair, and certainly what they did not know was ofthe progress of the deterioration on board the ship, evidenced by her manifest unsaleability and evidenced by the resolution of the plaintiff himself to make the best he could of her for himself, whatever that might be, instead of continuing to put her upon the market. I am not saying, and it was never contended on the part of the defendants that those were facts which ought to have been disclosed eo nomine or specifically to the underwriters, but what was said was that this deterioration and these facts with regard to her value were matters which were known to the assured and were not known to the underwriters. I think that is true, and, therefore, I hold that the plaintiffis not saved by the provisions of s 18(3)(b) of the Marine Insurance Act 1906.’ In St Margaret’s Trust Ltd v Navigators and General Marine Insurance Co Ltd* the insurance company knew the age, type, condition and agreed value of a ketch, and the intended manner in which she was going to be laid up. Morris J, held that it was unnecessary for the assured to describe the neglected state of her topsides caulking. The learned Judge observed:° ‘In the present case, the defendant company had insured this craft when she was owned by the Hardway Company. They had insured her without survey when she was in a mud berth at Fareham Creek, and they had insured her without survey after she was moved to deep water moorings at Gosport. When asked for quotation assuming that the craft was to be used as a houseboat, they said: “Our quotation then is 2 per cent, provided that there is a satisfactory survey on the underwater part ofthe hull and the moorings.” Afterwards the defendants were told that the quotation was not sought for the craft to be used as a houseboat, but it was sought for her when in mud berth and for a time when she would be out of commission, during which time she would be worked on by Mr Griffin, who was an experienced man in connection with yachts. The defendants knew that the Vishela was an old craft; that she was 43 years old.’ In Pacific Queen Fishertes v L Symes: The Pacific Queen® the United States Court of Appeals, Ninth Circuit, ’held that an altered method of handling gasoline on board vessels of the same type as the vessel insured was not a matter which the insurer was deemed to know, and was therefore a matter which the assured was under a duty to disclose. In Soya GmbH Mainz Kommanditgesellschaft v White® cargoes of soya beans were loaded on the vessels ‘Welsh City’ and ‘Corfu Island’ at an Indonesian port. They arrived at Antwerp in a heated condition. When the assured claimed under the policy, the insurers repudiated liability on the ground of non3 Ibid, at 120. + (1949) 82 LIL Rep 752, KBD. > Tbid, at 762. [1963] 2 Lloyd’s Rep 201, (US 9th Cir). Circuit Judge Pope, Circuit Judge Barnes and Circuit Judge Hamley. [1982] 1 Lloyd’s Rep 136, CA. ora 50 Non-disclosure disclosure of a material fact, ie that a similar cargo on the “Teviotbank’ had been shipped earlier and had also arrived heated. The Court of Appeal? held that the defence failed and that there would be judgment for the assured for, on the evidence, the insurers had been told of the damage suffered by the cargo on board the ‘Teviotbank’ and that that damage was insignificant and negligible. '° 3 Facts as to which information is waived If the assured satisfies the requirements of the contract by acting honestly in his disclosures, and by showing an endeavour to treat the insurer fairly, he will not be held responsible for not explicitly disclosing a fact which afterwards turns out to be material, if the information which he has given discloses sufficient to warn the insurer that such a fact existed. If the disclosure was one that should have put a careful man of business upon inquiry, the requirements of the contract will have been fulfilled. The fact that no such inquiry was made by the other party makes no difference, for he is presumed to have waived the need for specific information on the point in question. In Carter v Boehm’ Lord Mansfield said :'? ‘The insured need not mention what the underwriter ought to know, what he takes upon himself the knowledge of, or what he waives being informed of.’ Similarly, in Asfar & Cov Blundell’* MathewJ, briefly stated the rule thus:!* ‘It is a well settled principle of insurance law that underwriters are not entitled to be told what they waive all enquiry about. In this particular case they were told that there was a charter, and if they wanted to learn the contents of that charter, they had only to enquire.’ If, however, it appears from the evidence that it has become the established practice to disclose a certain fact when it exists, non-disclosure of that fact cannot be taken to be waived merely by the omission to inquire whether it exists Or.not.s” In Cantiere Meccanico Brindisino v Janson'® a floating dock in tow of two tugs was insured for a voyage from Avonmouth to Brindisi. The policy contained a clause stating ‘seaworthiness admitted’. The dock was lost on the voyage and the assured claimed for a total loss. The insurers refused to indemnify the assured on the ground that there had been a failure by them to disclose a material fact, viz that the dock had not been specially strengthened for the voyage. 10 Waller, Donaldson and O’Connor LJJ. See the judgment of Denaldson LJ: [1982] 1 Lloyd’s Rep 136 at 142. The case subsequently went to the House of Lords on another point, ie the prima facie rule in the Marine Insurance Act 1906, s 55(2)(c) that the insurer was not liable for loss by inherent vice had been effectively excluded by the words of the policy. See pp 255-256, post. "! (1766) 3 Burr 1905. ‘2 Thid, at 1910. "3 [1895] 2 QB 196. 15 Ibid, at 202. Cf Bates v Hewitt (1867) LR 2 QB 595. Mann, Macneal and Steeves Ltd v Capital and Counties Marine Insurance Co [1921] Federal Insurance Co [1927] 1 KB 65. = © [1912] 3 KB 452, CA. 2 KB 300; Greenhill v Circumstances which need not be disclosed 51 The Court of Appeal’” held that the action succeeded. The insurers, by the use of the clause ‘seaworthiness admitted’, had waived any duty on the assured’s part to disclose the want of special strengthening. In Mann, Macneal and Steeves Ltd v General Marine Underwriters'® a wooden ship was insured for a voyage from America to France and back again. Part of the cargo which she had contracted to carry from America consisted of petrol, but the assured did not disclose this fact. It was held by the Court of Appeal’® that in the circumstances of the case the insurers had waived disclosure of the contract by not making inquiry. Bankes LJ, said:?° ‘I do, however, consider that the appellants are entitled to succeed upon either of two grounds with which the learned Judge does not deal. In the first place, I think that the evidence as to the practice in relation to the non-disclosure of the character of cargo when effecting a policy on hull does not only justify, but requires, the court to hold that an underwriter waives any information in relation to what may be fairly described as a parcel ofordinary cargo of lawful merchandise, which this parcel was. In the second place, I think that the plea of waiver can be supported on the ground indicated by Lord Esher MR, in Asfar v Blundell,' where in dealing with the question of concealment he says: “‘But it is not necessary to disclose minutely every material fact; assuming that there is a material fact which he’’—the assured—“‘is bound to disclose, the rule is satisfied if he discloses sufficient to call the attention of the underwriters in such a manner that they can see that if they require further information, they ought to ask for it.” In my opinion the disclosure in the present case that this vessel was a wooden vessel with auxiliary motor engines was a disclosure of the fact that it was proposed to carry cargo from the United States to France in a vessel specially and dangerously liable to fire damage, and that such a disclosure was, within Lord Esher’s language, a sufficient disclosure to put the underwriter on inquiry.’ In George Cohen, Sons & Cov Standard Marine Insurance Co Ltd? RocheJ, held* that the insurers had waived the non-disclosure of the fact that the assured intended to send an obsolete battleship, which was being towed from Chatham to Brake (in Germany) to be broken up, to sea without any steam power on board. The omission to make inquiry is no waiver if the insurers are not put on inquiry. Waiver is not to be easily presumed.* Thus, in Greenhill v Federal Insurance Co Ltd’ celluloid was shipped from Halifax, Nova Scotia, to Nantes, and arrived in a damaged condition. When a claim was made under the policy, the insurance company repudiated liability on the ground that there had been non-disclosure of the fact that the celluloid had been previously carried from New York to Halifax on a very slow steamer, and that the cargo had been exposed to rough weather on deck and had been left on an open quay on arrival at Halifax. It was held by the Court of Appeal® that the pre-carriage of goods was a material fact and ought to have been disclosed. Accordingly, the insurance company was entitled to avoid liability. ‘7 Vaughan Williams, Fletcher Moulton and Buckley LJJ. 18 (1990) 124 LT 778, CA. 19 Bankes, Atkin and Younger LJJ. 20 (1920) 124 LT 778 at 780. [1896] 1 OB 123. 1925) 21 LIL Rep 30, KBD. Ibid, at 38. Greenhill v Federal Insurance Co Ltd (1926) 135 LT 244, CA. 1926) 135 LT 244, CA. Lord Hanworth Auk WN MR, Scrutton and Sargant LJJ. 52 Non-disclosure There had been no waiver of non-disclosure arising from the absence of inquiry by the company as to the manner in which the celluloid had been brought to Halifax. sea Sargant LJ, said: ‘But it is said that here there was, within s 18, sub-s (3), sub-head (c), a waiver by the insurer of information as to the previous history of the goods so far as pre-carriage was concerned, and this because such goods were known not to have originated in Halifax; that there must have been some pre-carriage, and that it was therefore for the insurers to make inquiries as to the circumstances of such pre-carriage. Had the pre-carriage necessarily or ordinarily involved incidents—vicissitudes—of the same character as those which occurred in the actual pre- carriage here, there would have been much in favour ofthis argument. But it is clear from the evidence that this is not so, and that the circumstances ofthe pre-carriage were so exceptional that they would necessarily be material and ought to have been disclosed. Indeed, the argument of the plaintiffs, if pressed to its logical conclusion, would in almost every case negative mere non-disclosure as a defence, since in almost every case appropriate inquiries would have got behind the non-disclosure and have elicited the material circumstances, unless indeed they had resulted in a positive mis-statement by the assured.’ In Inman SS Co v Bischoff® notice was given to the insurers that the vessel insured was chartered to a third party under a charter-party. The insurers did not ask for particulars of the charter-party. It was held that the assured was under no duty to disclose them for, on the facts, information as to them had been waived. Again, in The Bedouin there was an insurance on chartered freight. The ‘slip’ stated ‘Freight chartered and/or as if chartered on board or not on board onethird diminishing each month’. This showed the insurer that he was insuring ‘time chartered freight’. It was held that the insurer had waived information as to the fact that such a charter-party contained the usual ‘off-hire’ clause. In Freeland v Glover'® a letter was disclosed which mentioned an earlier letter. The insurer did not ask for the earlier letter to be shown to him. It was held that the information as to this letter had been waived. In Weir v Aberdeen'' the ship was overloaded, and so strained and laboured in her passage from London to the Downs that the owners asked leave to put some cargo ashore at Ramsgate, which was granted. It was held that there was no necessity to inform the insurers specifically that she had laboured heavily, for they had waived information as to this since the request to discharge the cargo was a sufficient intimation of her condition. In Pacific Queen Fisheries v L Syme: The Pacific Queen'* the insurers of a woodenhulled motor vessel were held not to have waived’? information as to an increase in her gasoline carrying capacity and an altered method of carrying gasoline, and accordingly were held entitled to avoid liability for the loss of the T (1926) 135 LT 244 at 253. 8 (1882) 7 App Cas 670. « ® [1894] P 1. Itis to be noted that in this case it was proved that it was a common usage to insert a cesser clause in a charter-party in regard to time freight; while in the earlier case of Mercantile SS Co v Tyser (1881) 7 QBD 73 the non-disclosure of a ‘cancelling clause in a policy on chartered freight was held to be non-disclosure of a material fact. 10 (1806) 7 East 457. See also, Court v Maritineau (1782) 3 Doug KB 161; Fort v Lee (1811) 3 Taunt 381; Asfar G Co v Blundell [1896] 1 QB 123 at 129. 'T (1819) 2 B&Ald 320. See also, Beckwith v Sydebotham (1807) 1 Camp 116. '2 [1963] 2 Lloyd’s Rep 201 (US Court of Appeals 9th Cir). "3 ‘The evidence as to the alleged waiver is set out ibid, at 209-210. Circumstances which need not be disclosed 53 vessel on the ground that these facts, which were material, had not been disclosed to them by the assured. In Gulfstream Cargo Ltd v Reliance Insurance Co: The Papoose'* it was held by the United States, Court of Appeals, Fifth Circuit,!* that the insurers of a vessel had not waived information of material facts, eg that she had unusual rhythmic vibrations, leaked excessively and was unfit for any use off shore.'® In Allden v Raven: The Kylie,’ where a claim was made in respect of the total loss of a yacht Parker J, held that, on the evidence,'® the insurers had not waived the non-disclosure by the assured that he had been previously convicted of handling a stolen dinghy, and that the yacht had been built from a kit. In Container Transport International Inc and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd‘° the Court of Appeal?° held that the assured had not established waiver of the non-disclosure of an inaccurate and misleading claims record, and of a refusal of a previous insurer to renew a policy.’ 4 Facts the disclosure of which is unnecessary by reason of a warranty Section 39(1) of the Marine Insurance Act 1906 states: ‘In a voyage policy there is an implied warranty that at the commencement ofthe voyage the ship shall be seaworthy for the purpose of the particular adventure insured.’ Accordingly, information in the possession of the assured which tends to show that the vessel insured under a voyage policy was not seaworthy need therefore not be disclosed.? On the other hand, there is no such implied warranty in time policies, and in such cases full disclosure must be made.? Again, where the nature of the cargo would necessarily cause bad stowage, information to this effect must be disclosed to the insurer, though the implied warranty of seaworthiness is broken by bad stowage or overloading.* D EXAMPLES OF MATERIAL AND IMMATERIAL FACTS Section 18(4) of the Marine Insurance Act 1906 states: ‘Whether any particular circumstance, which is not disclosed, by material or not is, in each case, a question of fact.’ ‘4 [1970] 1 Lloyd’s Rep 178. *S Brown ChJ, Tuttle and Godbold CtJJ. 16 See the judgment of Brown ChJ [1970] 1 Lloyd’s Rep 178 at 183. 17 [1983] 2 Lloyd’s Rep 444, QBD (Com Ct). 18 See ibid, at 445-448. 19 [1984] 1 Lloyd’s Rep 476, CA. 2° Stephenson, Kerr and Parker, LJJ. 1 See the judgment of Kerr LJ ([1984] 1 Lloyd’s Rep 476 at 500, and 506), and that of Stephenson LJ, ibid, at 529-530. 2 Schoolbred vNutt (1782) | Park’s Marine Insurances (8th Edn), p 493; Haywoodv Rodgers (1804) 4 East 590; Gandy v Adelaide Insurance Co (1871) LR 6 QB 746. 3 Russell vThornton (1859) 4 H&N 788; Cantiere Meccanico Brindisino v Janson [1912] 3 KB 452, CA. Foley v Tabor (1861) 2 F&F 663. See further, Weir v Aberdeen (1819) 2 B& Ald 320; Mann, Macneal and Steeves v Capital and Counties Insurance Co Ltd [1921] 2 KB 300. 54 Non-disclosure Section 18(5) provides: ‘The term “‘circumstance” includes any communication made to, or information received by, the assured.’ In Cantiere Meccanico Brindisino v Janson,’ which concerned a floating dock insured for a voyage from Avonmouth to Brindisi, Buckley LJ, emphasized that the material circumstance referred to ins 18(4) was a material circumstance of fact, and observed:° ‘But by material circumstance is, I think, meant a material circumstance of fact to the exclusion of a material circumstance of opinion. Whether the dry dock here tendered for insurance required to be strengthened for the voyage or not was, I think, a question of opinion. The assured honestly believed, and had the authority of Watkins’ report for believing, that she did not require to be strengthened for the voyage, but might safely be towed to a Mediterranean port provided that suitable arrangements for towing were made. The assured was bound to disclose that report as soon as he had it. He did so. If he had received any other report, say to a contrary effect, the existence ofthe opinion which it contained was a matter of fact, and its disclosure was necessary as being a material circumstance.’ It does not necessarily follow that because a fact has been held to be immaterial in one case, a similar fact is not material in another. The question is to be decided, if necessary, by a jury, as representing reasonable men.’ A number of cases decided before and after the passing of the Marine Insurance Act 1906 concerning the question of materiality are considered below. Sailing without convoy In Sawtell v Loudon® it was known at Lloyd’s that the ‘Sophia’ was at sea without convoy. The broker insured ‘on ship’ instead of ‘on goods’. The owner wrote to the broker saying that the ‘ “Sophia” was the same ship, but he supposed that she had been unable to join her convoy’. The letter was not disclosed to the underwriter when the policy was altered from ‘ship’ to ‘goods’. It was held that the letter was material and ought to have been disclosed. Presence of enemy In Beckwaite v Nalgrove? a letter received from the Cape of Good Hope saying that two or three French privateers were in those seas was held to be material. Readiness to sail In McAndrew v Bell*® on 24 November a letter dated 8 November, stating that the vessel was ready to sail, was received. Insurance was effected 2 December. It was held that the letter ought to have been disclosed. on a 2) (1912107. ET 281. CA! ° Ibid, at 287. 7 Joel v Law Union and Crown Insurance Co [1908] 2 KB 863, CA Moulton LJ, at 884. § (1814) 5 Taunt 359. Unreported, cited in (1810) 3 Taunt:41. ° (1795) 1 Esp 373. Ko} _ (life insurance) per Fletcher Examples of material and immaterial facts 55 Missing ship In Bridges v Hunter’! a letter was received containing bills of lading marked ‘with convoy’. If the bills of lading had been disclosed, the underwriters would have seen that the ship was not in Lloyd’s convoy list and was missing. The bills of lading were held to be material. Grounding of vessel In Russell v Thornton'* the fact that a ship had grounded and had sprung a leak was held to be material. Capture doubtful In De Costa v Scandret’* a merchant, on hearing that a vessel similar to his own was captured, effected an insurance without disclosing to the underwriters this information which was uncertain. It was held that he ought to have done so. Ships parting in storm In Westbury v Aberdein'* a policy dated 3 November was effected on the ‘King George’ which sailed from Malaga in company with the ‘Fruiter’ on 10 October. The ‘Fruiter’ arrived and reported that she had parted with the ‘King George’ in a storm off Oporto. This fact was held to be material, and ought to have been disclosed. Loss of vessel In Fitzherbert v Mather’ a letter from the shipper’s agent dated 16 September stated: ‘Goods shipped this day on board the ‘“‘Joseph”’, which immediately sailed.’ The policy was effected on goods on 21 September. It was held that the fact that the ship had gone ashore, and that the goods had been lost, should have been disclosed by the agent who knew about it. Vessel on rock In Gladstone v King’® insurance on a vessel was effected on 25 October. On the preceding 5 July she had been driven on to a rock. She got off, and her master wrote on 5 August without mentioning the matter as he thought her undamaged. She was in fact damaged. It was held that the fact that she had been on the rock was material, and ought to have been disclosed. Name of vessel In Lynch v Hamilton'’ a ship was posted at Lloyd’s on 22 November as seen at sea ‘T (1813) 1 M&S 15. 12 (1860) 6 H&N 140. See also, Holland v Russell (1863) 4 B&S 14. Ae ) 2 P Wms 170. ‘4 (1837) 2 M&W 267. 1S (1785) 1 Term Rep 12. © (1813) 1 M&S 35. See also, Morrison v Universal Marine Insurance Co (1873) LR 8 Exch 197; and Proudfoot v Montefiore (1867) LR 2 QB 511. 17 (1810) 3 Taunt 37. See also, Lynch v Dunsford (1811) 14 East 494 and Leigh v Adams (1871) 25 LT 566. a 56 Non-disclosure leaky and deeply laden. A policy ‘on ship or ships’ was effected on 26 November. The name of the vessel was not given, but she had in fact been captured. It was held that this was a material fact, and ought to have been disclosed. Previous history of vessel In Bates v Hewitt'® it was held that the assured should have disclosed that the insured vessel, which was a merchant ship, had formerly been a Confederate cruiser. Liability of lightermen In Tate v Hyslop,'? when effecting a policy with risks on craft and lighters, not specified to be without recourse against lightermen, the assured did not disclose the fact that he had contracted with the lightermen on terms which excluded their liability for negligence. It was held that this was a material fact, and that the insurer could avoid liability. Nature of port In Harrower v Hutchinson*® the assured did not disclose that under a policy ‘at and from Buenos Aires to port or ports of call’ the ship was going to a place to complete her cargo where there was no natural or artificial port, but only a kind of bay—a place which was then unknown to underwriters as a port ofloading. This fact was held to be material. Previous history of master The fact that the master of the insured vessel had not been to sea for 20 years and had then lost his ship has been held not to be a material fact.’ Previous history of goods In Berger and Light Diffusers Pty Ltd v Pollock? the fact that some steel injection moulds which were insured for a voyage from Australia to England had previously been found by various companies interested in using them for large- scale production to be unsuitable in their present state was held to be immaterial.° Sailing orders If the master sails under special orders which cause him to deviate from the customary route, or which fetter his discretion, they should be disclosed by the assured, otherwise the policy may be avoided both on the ground of non- disclosure and of deviation.* "8 (1867) LR 2 QB 595. '? (1885) 15 QBD 368. N ° (1869) LR 4 QB 523. See also, Laing v Union Marine Insurance Co (1895) 1 Com Cas 11. Thames and Mersey Marine Insurance Co Ltd v Gunford Ship Co Ltd [1911] AC 529, HL. [1973] 2 Lloyd’s Rep 442, OBD (Com Ct). See the judgment of Kerr J, ibid, at 465. Middlewood v Blakes (1797) 7 Term Rep 162. = WN Examples of material and immaterial facts 57 Date of arrival of vessel In Scottish Shire Line Ltd v London and Provincial Marine and General Insurance Co Ltd? the assured took out a freight policy in respect of apples to be carried from Tasmania to England. The apple season at Hobart was confined to the months of March and April. The assured had entered into a contract with the shippers of the apples to have the vessel at Hobart on or about 20 March, but this fact was not disclosed to the insurers. Hamilton J, in holding that this fact was material, said :° “The risk, if there was no date in this contract, would be that when the vessel arrived at Hobart, there might be no apples, in which case she could not earn freight by carrying them, and that she might be prevented from arriving at Hobart, while there were apples to ship, by perils of the sea. Considering that she was about to leave English waters at the end of the year, and considering that the apple season at Hobart appears to extend for about two months, to which, I suppose, must be added a few days—three or four, whichever it may be—during which apples in case may remain awaiting shipment without deterioration, the underwriter would in that view have a very considerable time range within which the vessel might arrive and save her freight. I do not say that the risk of her being injured, and so losing that freight, would not be a considerable one, but it would be a risk measured by the extent of the range of time within which she could arrive and save it. If the time was to be about 20 March, not much before and not much after, it seems to me that the risk is intrinsically altered, and the likelihood of the underwriter being called upon to pay in the event of accident is considerably increased.’ Date of sailing In some early cases the date of sailing was held to be always a material fact.’ It is, however, now settled that the question whether the date of sailing is a material fact depends entirely upon the circumstances of the particular case, and is not to be assumed against the assured.® The samg observation applies to ships other than the vessel insured or concerned in the policy, which may have sailed at the same time.” Overvalued cargo In Jonides v Pender’® the assured did not disclose that the real value ofthe insured cargo was £970, but he insured it for £2,800. The insurer was held to be entitled to avoid liability because the overvaluation was material. In Berger and Light Diffusers Pty Ltd v Pollock,'’ where the assured had stated that some steel injection moulds were worth £20,000, it was held that the insurers had failed to prove that the alleged overvaluation was material. > (1912) 107 LT 46, KBD. SN bids ats53: 7 Fillis v Brutton (1782) 1 Park’s Marine Insurances (8th Edn), p 414; Shirley »vWilkinson (1781) 3 Doug KB 41; Bridges v Hunter (1813) 1 M&S 15. 8 Fort v Lee (1811) 3 Taunt 381; Foley v Moline (1814) 5 Taunt 430; Rickards v Murdock (1830) 10 B&C 527; Elkin v Janson (1845) 13 M&W 655; Stribley v Imperial Marine Insurance Co (1876) 1 QBD 507; Scottish Shire Line Ltd v London and Provincial Marine and General Insurance Co [1912] | 3 KB 51. 9 Kirby v Smith (1818) 1 B& Ald 672; Elton v Larkins (1832) 8 Bing 198; Frere v Woodhouse (1817) Holt NP 572; Court » Martineau (1782) 3 Doug KB 161; McAndrew v Bell (1795) | Esp 373; Westbury v Aberdein (1837) 2 M&W 267. 10 (1874) LR 9 QB 531. See also, Gooding v White (1913) 29 TLR 312. 11 [1973] 2 Lloyd’s Rep 442, QBD (Com Ct). (See the judgment of Kerr J, ibid, at 465.) 58 Non-disclosure In Williams v Atlantic Assurance Co Ltd'* the insurers repudiated liability for the loss of a cargo of textile goods shipped from Alexandria to Liverpool, on the ground that they had been grossly overvalued. They contended that they had been told that they were worth £8,000 whereas in fact their value was only £250. Scrutton LJ, giving judgment in the Court of Appeal, held (obiter) that this plea failed because the underwriters had not given evidence in support of their . allegation, and said:'* ‘The underwriters have not taken the course, which, in my view, should always be pursued, of going into the box and saying what they knew and what was the material fact which they did not know. In my view an underwriter pleading concealment must come and say what he was or was not told. He may not remember directly, but may be able to say, as he said in Greenhill v Federal Insurance Co Ltd,‘* that he cannot have been told this material fact—that if he had known it, he would never have dreamed of writing this policy at the ordinary rate of premium. ... The underwriter ... was not called. ... In my view, in a plea of concealment, the underwriter must be called to say what he was told, unless all communications are in writing. ... If therefore the case had turned only on concealment,'* I should have refused to decide against the plaintiff on it, as I think the matter of such general importance that calling the underwriter should be strictly required .. .’ Unseaworthiness of vessel In Marmion v Fohnston'® a derrick barge over 50 years old was insured under a time policy against perils of the sea. She sank during a gale at her moorings in the North Carriers’ Dock, Liverpool. She was raised, but repairs were found to be impracticable, and the assured claimed for a constructive total loss. The insurer repudiated liability on the ground that the barge was unseaworthy, and that the assured had not disclosed her unseaworthy condition. A special jury found that the barge was seaworthy,'’ and that her sinking was caused by the gale. Charles J, gave judgment for the assured. In Gulfstream Cargo Ltd v Reliance Insurance Co: The Papoose’® the insurers were held to be entitled to avoid liability under a time policy in respect of the insured vessel because the assured had not disclosed that (i) inJune 1961 the master had reported to the assured that the vessel had unusual rhythmic vibrations and leaked excessively; (ii) after a period in a shipyard she again leaked excessively; and (iii) in September 1961 a marine surveyor had reported that she was unfit for any use off shore.'? Refusal of risk by another insurer In marine insurance it is unnecessary for the assured to disclose that the risk has been previously refused by other insurers.?° ‘2 [1932] All ER Rep 32, CA. 13 Tbid, at 36. ‘4 [1927] 1 KB 65. ‘ "> The case turned principally on the question whether the value of the goods insured under an unvalued policy had been proved to the satisfaction of the Court. As to this point, see p 99, post. "© (1928) 31 LIL Rep 78 (Liverpool Assizes). ‘7 As to the evidence on this point, see ibid, pp 78-79. "8 [1971] 1 Lloyd’s Rep 178 (US Court of Appeals 5th Cir). *? See the judgment of Brown Ch], ibid, at 182. 20 But in other branches of the law of insurance such a refusal of the risk has been held to be material. See Ivamy, General Principles of Insurance Law (4th edn, 1979), p 146. Examples of material and immaterial facts 59 hus, in Glasgow Assurance Corpn Ltd v William Symondson & Co' Scrutton 4, said: ‘The ordinary man in the street would, I am sure, think it material to know that the risk he was offered had been previously refused by six other underwriters; and many life insurance offices expressly ask the question: “Has your life been refused by any other office?” But it is elementary marine insurance law that such refusals need not be disclosed to another underwriter. The ordinary business man would, I am sure, think it material to know that the underwriter wanting to reinsure thought so badly ofthe risk that he was ready to pay a higher premium than he received to get rid of it; but no one has ever suggested that this need be disclosed.’ Again, in North British Fishing Boat Insurance Co Ltd v Starr? Rowlatt J, observed :* ‘Now, no one contends that the mere fact that other underwriters have refused a risk ought to be disclosed. The underwriter sits there to receive offers of business and to accept or refuse them as he thinks fit, and what one man thinks good business another man may not care to take. And he sits there to gauge the situation, and to quote for himself.’ Previous claims record In Container Transport International Inc and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd° the assured was held to have been guilty of non-disclosure of a material circumstance in putting forward an inaccurate or incomplete and misleading claims record. Reinsured goods already lost In London General Insurance Co v General Marine Underwriters’ Association® the original insurers of a cargo did not disclose to the reinsurers that the insured cargo had already been damaged by fire on 24 September. News of the casualty was posted at Lloyd’s on the morning of 25 September, and should have been seen by the insurers. The policy of reinsurance was effected on the afternoon of 25 September. It was held that the reinsurers could avoid liability on the ground of non-disclosure of a material fact. Nationality of assured In Campbell v Innes’ it was held that the non-disclosure of the nationality of the assured was material and a ground on which the insurer could avoid liability. But in Associated Oil Carriers Ltd v Union Insurance Society of Canton Ltd® where the insured vessel had been chartered to a German shortly before the outbreak of the First World War, it was held that it was unnecessary for the assured to disclose the charterer’s nationality as this was not a material fact. * (1911) 104 LT 254. > Ibid, at 257. 3 (1922) 13 LIL Rep 206, KBD. * Ibid, at 210. [1984] 1 Lloyd’s Rep 476, CA. [1921] 1 KB 104. (1821) 4 B& Ald 423. [1917] 2 KB 184. Cf British and Foreign Marine Insurance Co Lid v Samuel Sanday & Co [1916] 1 AC 650, HL. rorAaaanwnw 60 Non-disclosure In Demetriades & Cov Northern Assurance Co? a cargo was insured for a voyage from Leith to Piraeus. The vessel carrying it sank off the coast of Portugal. When the assured claimed for a loss under the policy, one of the grounds’® on which the insurers repudiated liability was that there had been non-disclosure of a material fact, viz that there was a Greek interest in the vessel, and that this was material to the risk in view of the attitude of underwriters with regard to Greek ships. The House of Lords'’ held that this was a material fact which ought to have been disclosed, and that consequently the insurers were entitled to avoid liability. Lord Shaw of Dunfermline said:'? ‘A material representation which should have been made, and was not made but was concealed, was that this was a Greek ship. In my opinion, as I have said, that was material enough to avoid the contract if the falsehood in regard to that matter was upon the register. But when we come to the actual fact of the nationality of the vessel, how material it is appears from the evidence of Mr Harper, the shipping editor of““Lloyd’s List and Shipping Gazette”, who gives the official statistics with regard to a long period of time, namely, the period from 1 September 1920 to 30 November 1921. During that period, 14 British vessels of over 500 tons were lost, and during the same period 27 Greek vessels were lost, that is to say, nearly double the number of Greek vessels to British. But, my Lords, that is not really the substantial comparison. The substantial comparison is the relation of Greek losses to Greek tonnage afloat as compared with British losses compared with British tonnage afloat, and the startling fact is that for every 22,000 Greek tons afloat one vessel was lost, whereas in the case of British registered ships one loss only occurred in the case of 1,570,000 tons afloat, a contrast so startling that it requires very little evidence in a law court to convince me that in the insurance and shipping world any representation which would conceal the Greek nationality of the vessel was a material matter for the contracting parties. That misrepresentation or concealment on the subject having occurred, the defence is completely justified.’ Previous conviction of assured In Allden v Raven, The Kylie,* where the assured claimed for a total loss of a yacht, he admitted that the non-disclosure of a previous conviction'* for handling a stolen dinghy was material,’* but sought to prove that the insurers had waived such non-disclosure. Parker J, dismissed the claim on the ground that, on the evidence,'® no waiver had been established. Vessel already sailed In A C Harper & Co Lid v R D Mackechnie & Co*’ the sellers had sold some glacial acetic acid to the buyers cif Singapore. The buyers contended that the sellers ° (1926) 21 LIL Rep 265, HL. *° Another ground was that there had been a misrepresentation of a material fact. As to this aspect of the case, see p 75, post. 11 Viscount Cave LC, Lord Dunedin, Lord Shaw of Dunfermline, Lord Sumner and Lord Buckmaster. 12 (1925) 21 LIL Rep at 269. See also the speech of Lord Sumner, ibid, at 269. 13 [1983] 2 Lloyd’s Rep 444, QBD (Com Ct). For previous convictions, see further Ivamy, General Principles of Insurance Law (4th edn, 1979), 15 16 pp 156, 159-160. The assured also admitted that the fact that the yacht had been built from a kit was also a material one. See p 66, post. See [1983] 2 Lloyd’s Rep 444 at 445-448. 17 (1925) 22 LIL Rep 514. Examples of material and immaterial facts 61 had not tendered to them a valid policy of insurance because the insurance company had refused to pay in respect of a loss covered by it, on the ground that there had been a non-disclosure of a material fact, viz that the vessel carrying the goods had sailed at the time when the insurance was effected. RocheJ, held that the insurance company was entitled to do so, and that the policy was invalid. Accordingly, the buyers were awarded damages against the sellers for breach of the terms of the cif contract. He observed:'8 ‘So far as I can judge, the objection by the insurance company is a good one. It is not denied on of the defendants that under ordinary circumstances it is material that the underwriter behalf should be told, ifhe is insuring, not that the goods are to proceed on a voyage, but whether they have proceeded on a voyage. There are reasons as to the season and the weather which makes it desirable to be known. What is argued and supported by evidence for the defendants is the proposition that under the broad circumstances ofthe case the underwriter either was told all that was material or waived disclosure offurther facts. I have heard all the witnesses; and I am satisfied that no more was made plain to the underwriters than this, that the business which the brokers had done with the other insurance companies was to be transferred to them; and I find there was no disclosure ofthe fact that the sailing in question was a past sailing and that there was no waiver by the underwriters of any information material to be given.’ Overvaluation of vessel In Piper v Royal Exchange Assurance’? a vessel was insured for £2,500. She stranded on the Buxey Sands while on a voyage to Burnham-on-Crouch. The assured claimed under the policy, but was met with the defence that she was overvalued and that therefore there had been non-disclosure of a material fact, and that the insurers accordingly were entitled to avoid liability. Roche J, held that the claim succeeded. At the time of the stranding the assured was endeavouring to sell her at a price rather less than the insured value, and it could not be said that he was aware ofher actual value, which was little more than the value of her lead keel. His Lordship observed :?° ‘In my judgment the vessel never was worth £2,500; but it does not follow that the overvaluation was one which avoided the policy. . . . I think [the assured] was hoping against hope that he might sell this vessel, and might sell her at somewhere about £2,000, or perhaps rather less. It may not have been very honest, from some points of view, to sell a vessel with those defects, but still, it is not a matter quite unknown in business and I am not prepared to find that he so knew at that date of her deficiency in value and that he ought to have told his underwriters in 1928. In other words, that was his asking price at that time, and I am not prepared to find that he ought to have declared her at a lower figure.’ Another issue in Piper v Royal Exchange Assurance’ concerned a later policy in respect of the same yacht, and this issue also was whether she was overvalued. The insurers repudiated liability in respect of damage to her by fire on the ground that she had been overvalued to the assured’s knowledge. It was proved that she was only worth half the sum for which he insured her, and there was little chance of selling her, and repairs which had been carried out on her had not been effective to get rid of the real trouble that affected her saleable value. '8 Thid, at 515. j 19 (1932) 44 LIL Rep 103, KBD. The case also concerned insurable interest and the question whether the stranding was accidental. As to these matters, see pp 17-18, ante, and p 239, post, respectively. 20 (1932) 44 LIL Rep 103 at 119. " Ibid. 62 Non-disclosure RocheJ,held that the vessel was overvalued to the knowledge of the assured, and that the insurers were not liable. He observed :? as, half the ‘J am satisfied that at that time the vessel was worth little more than, if as much value at which she was insured; that £1,000 or £1,200 would have represented the whole a material value of the ship—her mast, her sails, and everything. That, in my judgment, is circumstance which the assured knew, and which would have made a difference to the on underwriters so that they would not have insured the risk at all. I accept the evidence given that matter by the underwriters. The matter had been progressive ever since the beginning. The inherent defects in this ship, and her want ofsaleability, had been becoming progressively known to the assured, and at that date, at any rate, if not before, he ought to have disclosed the decrease in value to the underwriters if he wanted them to insure her at that value.’ In Slattery v Mance? a yacht was insured for £4,450. The assured failed to disclose that a month before the policy was effected, he would have been willing to accept an offer of £2,250 for her from a prospective buyer. This fact was held to be material and a ground on which the insurer could avoid liability, because the overvaluation had not been disclosed. Customer’s complaints as to state of goods In Bird’s Cigarette Manufacturing Co Ltd v Rouse* the assured effected a policy in respect of some cigarettes in a warehouse in Cologne, but did not disclose the fact that complaints had been made by customers that some of them were mildewed. Bailhache J, held that this was a material fact which ought to have been disclosed to the insurers, and since it had not been disclosed, they were entitled to avoid liability for a loss arising under the policy.” Condition of goods on shipment In Berger and Light Diffusers Pty Ltd v Pollock® the fact that the bills of lading relating to some steel injection moulds which were insured for a voyage from Australia to England were ‘claused’ in that they described the goods as ‘unprotected’, ‘secondhand’ and ‘insufficiently packed’ was held not to be material. ’ In Liberian Insurance Agency Inc v Mosse® a cargo described as ‘enamelware (cups and plates) in wooden cases’ was insured for a voyage from Hong Kong to Monrovia and arrived in a damaged condition. Donaldson J, held that the insurers could avoid liability on the ground of non-disclosure of material facts viz (i) the cargo included 823 cartons as contrasted with wooden cases; (ii) a significant proportion of the enamelware had been touched up by overpainting; and (iii) the cargo was an end of stock or job lot purchase and had been bought at a cheap rate. 2 Ibid, at 120. * [1962] 1 QB 676. See further, Visscherij Maatschappij Nieuw Onderneming v Scottish Metropolitan Assurance Co Ltd (1922) 27 Com Case 198, CA (overvalued trawler). * (1924) 19 LIL Rep 301, KBD. ° His Lordship also held that the insurers were entitled to avoid liability on the ground that there had been a breach of a warranty. As to this point, see p 291, post. ® [1973] 2 Lloyd’s Rep 442, QBD (Com Ct). 7 See the judgment of Kerr J, ibid, at 465. 8 [1977] 2 Lloyd’s Rep 560, QBD. (See the judgment of DonaldsonJ, ibid, at 565.) The learned Judge also held that the insurers could avoid liability under the Marine Insurance Act 1906, s 20 for there had been material misrepreséntations as to the state of the cargo in the respects mentioned above. See p 77, post. Examples of material and immaterial facts 63 Other insurance policies effected by assured The fact that the assured, in addition to effecting a hull policy, had also taken out a policy on freight and disbursements has been held to be a material one which he must disclose to the insurers.” Thus, in Thames and Mersey Marine Insurance Co Ltd v Gunford Ship Co Ltd'° the assured effected a valued policy in respect of a vessel for a voyage from Hamburg to Santa Rosalia, the sum insured being £18,500, whilst her real value was only £9,000. But the insurance company was not told that the assured had also taken out policies to a large amount on freight and disbursements. She was wrecked off the Brazilian coast. It was held by the House of Lords'* that the insurance company could avoid liability on the ground of non-disclosure of a material fact. Lord Shaw of Dunfermline said:'? ‘I do not find myself able to agree with the judgment ofeither House of the Court ofSession. It follows upon the nature of the argument there presented that no duty rests upon the owners, or agent, to disclose to the insurers of the hull facts of the character found in this case. I cannot assent or give any countenance to such a view. The learned Lord Ordinary says: “I cannot see that there is any duty whatever on the part of the assured to disclose to the underwriter on hull, who accepts the vessel at a declared value, that he is also effecting insurances upon freight and disbursements.” The opinion ofall your Lordships is to an opposite effect, and I humbly agree with that opinion. So far as the effecting of insurances upon freight is concerned that is sound business, because it is grounded upon a stipulation for true indemnity; but so far as disbursements, wherever they are duplications of freight, are concerned, these, when freight has already been insured, form no part of a contract of indemnity, but the insurance upon them is merely a gamble, discountenanced by sound principle and not enforceable by law.’ In Mathie v Argonaut Marine Insurance Ltd’? the plaintiff sent his vessel in ballast from a port in the United Kingdom to Delagoa Bay to load a cargo there for Mauritius. He took out a freight policy for £6,000 in the form ‘Freight and anticipated freight and/or chartered freight on board or not’. On the arrival of the vessel at Delagoa Bay a cargo for Mauritius was not available, so the plaintiff supplied a cargo of coal for Bombay and insured it for £6,000. The cargo was lost in the course of the voyage to Bombay. The plaintiff claimed against the insurers, but they repudiated liability on the ground that he had not disclosed the fact that there was already in existence a policy for £6,000 on freight. They contended that the actual freight upon the coal from Delagoa Bay to Bombay might have been something from £1,800 to £2,000, and that, ifthe insurance ofthe cargo and the freight were added together, there was no doubt that it was considerably in excess of the total value of the cargo and the freight which, calculated on the price at which the plaintiff thought that he could sell the cargo at Bombay, was £7,200. The House of Lords!* held that the action succeeded, for there had been no ° Thames and Mersey Insurance Co Ltd v Gunford Ship Co Ltd [1911] AC 529, HL. 10 [1911] AC 529, HL. 11 Lord Loreburn LC, Lord Macnaghten, Lord Alverstone, Lord Shaw of Dunfermline and Lord Robson. CIO LOS9 LT 31 2"at 31,7. "3 (1925) 21 LIL Rep 145, HL. 14 Tord Buckmaster, Lord Dunedin, Lord Atkinson, Lord Sumner and Lord Wrenbury. 64 Non-disclosure non-disclosure of a material fact. Lord Buckmaster adopted’ ® the test used by Bailhache J, who had said in the trial court: “As I understand it, in order to find out whether existing insurances ought to be disclosed when a fresh insurance is taken out one has to consider this: of course, one must take the figures, but one has to consider whether the discrepancy between the insured value and the actual insurable value is ofsuch a nature as to change the character ofthe risk from a business risk to a speculative risk.’ * He himself saw no reason to differ from the conclusion of fact reached by BailhacheJ, to the effect that in the circumstances of the case there had been no change in the character of the risk. Lord Dunedin said that there was a vital difference between the present case and Thames and Mersey Insurance Co Ltd v Gunford Ship Co Ltd, 17 where it had been held that the risk was entirely speculative. His Lordship observed:'® ‘But here if these underwriters had been told about the Liverpool policy and had then asked the question ‘““How came you to insure freight for £6,000?”, they would have been told: “I insured it for £6,000 because that was the limit, seeing the value of the hull, to which I was entitled to go.” In other words, they would have been told that the transaction was a perfectly ordinary one. It does not seem to me that anything happened to change what was a perfectly usual and legitimate business transaction into a purely speculative one.’ In Wilson, Holgate & Co Ltd v Lancashire and Cheshire Insurance Corpn Ltd‘? 657 barrels of palm oil were insured for a voyage from Singapore to Liverpool. The policy contained the following clause: ‘Average payable on each package separately or as customary including risks of leakage, and breakage from any cause whatsoever irrespective of percentage.’ One hundred and seven of the barrels were found to be damaged on arrival at Liverpool. The assured claimed for a loss under the policy, but the insurers denied liability on the ground that the assured had failed to disclose that they had effected another insurance against marine risks ‘fpa and warranted free from all claims for leakage and breakage however caused’. The insurers also contended that the assured had not disclosed the fact that the bills of lading, under which the goods were shipped, contained a marginal note which stated ‘Not responsible for leakage, old casks’. Bailhache J, held that the defence of non-disclosure failed, and that the insurers were liable.?° As to the failure to disclose that another insurance policy had been effected in respect of the goods, he observed:! “Then it is said that there has been non-disclosure of material facts. The first material fact nondisclosed is that there was an insurance effected with the Marine Insurance Society of Canton. That was an insurance against marine risks fpa, and warranted free from all claims from leakage and breakage, however caused. It did not cover the particular risk intended to be s "> (1925) 21 LIL Rep 145 at 146. *© (1924) 18 LIL Rep 118 at 121. "7 [1911] AC 529, HL. "8 (1925) 21 LIL Rep 145 at 146. "9 (1922) 13 LIL Rep 486, KBD. ?° Other defences were that the loss of the goods was due to inherent vice, and that the goods had not been properly described in the policy. As to these matters, see pp 250-251, post, and p 276, post, respectively. * (1922) 12 LIL Rep 486 at 488. Examples of material and immaterial facts 65 covered by this policy, and, in my opinion, there was no reason why the fact of that insurance should be disclosed to the underwriters in this case.’ As to the failure to disclose the condition of the casks, his Lordship said:? ‘Then it is said that the ... bill of lading contained the following marginal clause: ‘“‘Not responsible for leakage, old casks’. No point is made about the words “not responsible for leakage”’, but it is said that the fact that the bill of lading contained the marginal clause “‘old casks” ought to have been communicated to the underwriters. Now, it has to be borne in mind that the casks contained oil. It is better to use second-hand casks than new casks, and once you get as far as that I do not see how a man is to distinguish between second-hand casks and old casks. T'wo of the underwriters have said that if they knew these marginal words were on the bill of lading, they would not have insured. That is all very well. But the first witness said, and the second one agreed with him, that in the whole of his experience of 30 years as an underwriter he has never been told what sort of casks oil was contained in. He made that statement in answer to a question by me, because my impression was that the class of casks in which oil is contained never is stated on the “slip” which is submitted to an underwriter, and he has no information about it. In my opinion, if the underwriter had asked about it, he would have been entitled to be told. He was not entitled to be told inasmuch as he asked no question about it. Evidently it is not the practice to tell underwriters what sort ofcasks the oil is contained in.’ Undervaluation in floating policy In Rivaz v Gerussi? the undervaluation of interests in floating policies for named sums to cover shipments ‘to be declared and valued as interest might appear’ was held to be a material fact. Carriage of insured cargo on deck In Alluvials Mining Machinery Co v Stowe* 68 barrels of kerosene were insured from a port in the United Kingdom to some mines in Nigeria. The assured had arranged for the goods to be carried as deck cargo at shipper’s risk, but this fact was not disclosed to the insurer. The barrels contained 2,135 gallons ofoil, but only 200 gallons arrived at the mines. When sued under the policy, the insurer repudiated liability on the ground that there had been non-disclosure of a material fact. Greer J, held that this defence succeeded, and that the action failed.° He observed:® ‘Even if the carriage of the goods on deck amounted to a variation ofthe risk by reason ofthe exercise of the liberty granted to the shipowner, the risk to carry goods on deck is a very grave risk—so grave that, though I do not accept the view that it is absolutely impossible at any premium to get anyone at Lloyd’s to insure such a risk, it is almost impossible and very difficult, and not in the ordinary course of business for any such risk to be taken up. And in these circumstances this is a most material fact. Even assuming the shipowner might carry the goods on deck, still it seems to me it would be a most material fact to be disclosed if in fact an agreement has been made that they should be carried on deck, because there is a great difference between the state of affairs which arises when a contract is made that the goods shall run a particular risk, and when it is a mere possibility that this risk may arise.’ Ibid, at 488. (1880) 6 QBD 222. (1922) 10 LIL Rep 96, KBD. . His Lordship also held that the loss was not covered by the policy because there had been no variation of risk within the meaning of clause 5 of the Institute Clauses. As to this point, see pp 81-82, post. -F vn WN a (1924) 10 LIL Rep at 98. 66 Non-disclosure Vessel’s gasoline carrying capacity In Pacific Queen Fisheries v L Symes: The ‘Pacific Queen’’ one of the issues was whether the insurers of a wooden-hulled motor vessel were entitled to repudiate liability for her loss on the ground that the assured had failed to disclose increases in risk caused by an increase in the gasoline carrying capacity of the vessel from 3,000 to 8,000 gallons and the extra-hazardous methods of carriage. The United States Court of Appeals Ninth Circuit? held*® that these facts were material, and that this defence of the insurers succeeded. Use of premises In James Yachts Ltd v Thames and Mersey Marine Insurance Co Ltd,'' the insurers were held’? to be entitled under the Marine Insurance Act ofBritish Columbia (RSC 1960 c 231), s 20'? to avoid liability under a builders’ risk policy on the ground that the assured had failed to disclose the fact that (i) the local authority had refused to give him permission to use the premises consisting ofa boat yard for any industrial use because they were a high hazard risk, and (ii) the assured was in financial difficulties and would be less able to maintain the equipment used and thereby would increase the hazard.'* Yacht built from kit In Allden v Raven, The Kylie’® the insurers sought to repudiate liability in respect of the loss of ayacht on the ground that the assured had not disclosed the fact that he had built it from a kit.'® The assured admitted that this fact was material but alleged that non-disclosure ofithad been waived by the insurers. Parker J, however, held that, on the evidence,'’ the claim for the loss of the vessel failed because no such waiver on the part of the insurers had been established. E THE DURATION OF THE DUTY OF DISCLOSURE The assured is under a duty to disclose to the insurer all material facts ‘before the contract is concluded’.'® ” [1963] 2 Lloyd’s Rep 201 (US Court of Appeals 9th Cir). 8 The evidence is set out at [1963] 2 Lloyd’s Rep at 203-5. ° Circuit Judge Pope, Circuit Judge Barnes and Circuit Judge Hamley. *° [1963] 2 Lloyd’s Rep 201 at 210. ! [1977] 1 Lloyd’s Rep 206 (Supreme Court, British Columbia). '* See the judgment of RuttanJ,ibid, at 212. It was also held that the assured was in breach of the implied warranty of legality set out in the Marine Insurance Act of British Columbia (RSC 1960, c 231), s 43. As to this point, see p 310, post. mi Which corresponds to the (English) Marine Insurance Act 1906, s 18. For the evidence, see [1977] 1 Lloyd’s Rep at 208-211. *S [1983] 2 Lloyd’s Rep 444, OBD (Com Ct). *© He also admitted that a previous conviction for handling a stolen dinghy was material and ought to have been disclosed. See p 60, ante. "7 [1983] 2 Lloyd’s Rep 444 at 445-448. "8 Marine Insurance Act 1906, s 18(1) The duration of the duty of disclosure 67 Section 21 of the Marine Insurance Act 1906 states: ‘A contract of marine insurance is deemed to be concluded when the proposal ofthe assured is accepted by the insurer, whether the policy be then issued or not; and for the purpose of showing when the proposal was accepted, reference may be made to the slip or covering note or other customary memorandum of the contract . . .’!° Similarly, in a case decided before the Act, it was said:?° ‘The “slip” is in practice, and according to the understanding of those engaged in marine insurance, the complete and final contract between parties fixing the terms of the contract and the premium so that neither party without the assent of the other can deviate from the terms thus agreed upon without a breach of faith.’ Hence, if everything material be communicated up to the time of the initialling of the ‘slip’ by the underwriter, but something material arising between that time and the time of executing the policy is not communicated, there is no non-disclosure so as to vitiate the policy.’ Where, however, the underwriter issues the policy under protest, after he has received information that a material circumstance has not been disclosed, he is not estopped from disputing his liability on the ground of such non-disclosure, merely because he has issued the policy.* In Niger Co Ltd v Guardian Assurance Co Ltd,* which concerned a loss of goods stored in a warehouse at Burutu whilst in transit from the United Kingdom to Africa and from Africa to the United Kingdom, an excessive accumulation of goods occurred there due to the difficulty of getting shipping space. The policy was effected in January 1916, and the accumulation occurred after that date. When they were sued under the policy, one of the defences* pleaded by the insurers was that the assured should have disclosed the accumulation, and since no disclosure had been made, they could avoid liability under the policy. It was held by the House of Lords? that this defence failed, and that the claim under the policy succeeded, because there had been no non-disclosure, since non-disclosure was a matter which went only to the formation of the contract, and once the contract had been concluded no further disclosure was necessary. Lord Sumner observed:® ‘There remains the question of non-disclosure. The object of disclosure being to inform the underwriter’s mind on matters immediately under his consideration, with reference to the taking or refusing of a risk then offered to him, I think it would be going beyond the principle to say that each and every change in an insurance contract creates an occasion on which a '° This section is printed in the text as amended by the Finance Act 1959, Eighth Schedule, Part II. 20 Tonides v Pacific Fire and Marine Insurance Co (1871) LR 6 QB 674 at 684. ' Cory v Patton (1874) LR 9 QB 577; Lishman v Northern Maritime Insurance Co (1875) LR 10 CP 179; Tonides v Pacific Fire and Marine Insurance Co, supra; Berger and Light Diffusers Pty Ltd v Pollock [1973] 2 Lloyd’s Rep 442, QBD (Com Ct), where it was held that there was a continuing duty of disclosure between the date ofthe ‘cross-slip’ and the ‘signing slip’. (See the judgment of Kerr J, ibid, at 461.) 2 Nicholson v Power (1869) 20 LT 580; Morrison v Universal Marine Insurance Co (1873) LR 8 Exch 197, 3 (1922) 13 LIL Rep 75, HL. 4 Another defence was that the adventure had not been prosecuted with reasonable despatch as required by s 48 of the Marine Insurance Act 1906. As to this point, see p 137, post. 5 Lord Buckmaster, Lord Atkinson, Lord Sumner and Lord Wrenbury. ® (1922) 13 LIL Rep 75 at 82. See also the speech of Lord Buckmaster, ibid, at 76-77, and that of Lord Atkinson, ibid, at 78-79. 68 Non-disclosure general disclosure becomes obligatory, merely because the altered contract is not the unaltered contract, and therefore the alteration is a transaction as the result of which a new contract of insurance comes into existence. This would turn what is an indispensable shield for the underwriter into an engine of oppression against the assured.’ In Willmott v General Accident Fire and Life Assurance Corpn’ a motor boat, which was insured under a time policy, sank during a gale while lying at moorings off Anchor Head near Weston-super-Mare. When a claim in respect of a total loss was made by the assured, the insurers denied liability on the ground that he had not disclosed the fact that the vessel would be habitually moored off Anchor Head.® When the policy was entered into, he had no intention that she should ever be moored anywhere except in Knightstone Harbour, and, in fact, she was not moved to Anchor Head until 2 months later. BransonJ, held that this defence failed, and that the action succeeded. The change of plan as to mooring was made subsequent to the date ofthe policy, and such a change was not prohibited by the policy. Consequently the question of non-disclosure of that material fact did not arise. He observed:? ‘The position with regard to that is this, that until some time after Whitsuntide, which happened in June, this policy having been entered into in April, there seems to have been no intention on the part of the plaintiff that the ship should ever be moored anywhere but in Knightstone Harbour. No doubt in June, when it was discovered that sometimes it shortened the period during which the vessel would be available for running passenger trips, moorings were put down in this Gut and afterwards the ship was very frequently moored there, but the fact that that state of things arose in June is nothing to do with the allegation that there was a failure to disclose the material fact in April. It was not a fact in April that she was going to be moored off Anchor Head; that was simply something which came about at a subsequent time altogether. As I said in the course of the argument, had the defendants desired to make it a contractual obligation on the part of the plaintiffto keep his boat in Knightstone Harbour and nowhere else, they could have made a condition to that effect, but they did not, and the result is that though they may have complained ifhe had intended, when he gave his answers to the questionnaire, to keep this boat at Anchor Head and not at Knightstone Harbour—of course, they could have complained then—they cannot complain, ifthe answer was true at the time it was given, because a subsequent change ofplans, which is not prohibited by the contract into which he has entered, has not prevented him from keeping her not infrequently, or indeed very often, at another and less safe mooring.’ F THE EFFECT OF NON-DISCLOSURE The effect of non-disclosure is set out in s 18(1) of the Marine Insurance Act 1906 which states: ‘If the assured fails to make such disclosure, the insurer may avoid the contract.’ The insurer is entitled in such a case to elect which course he will adopt. He may either return the premium and declare the contract at an end, or he may retain the premium and allow the contract to stand. The right to avoid the contract exists from the time when it is made and continues until the insurer, with full knowledge of the non-disclosure, affirms or is deemed to affirm the contract. Full knowledge of the facts is essential before 7 (1935) 53 LIL Rep 156, KBD. 8 Other defences were that the vessel: was unseaworthy, and that the assured had made a material misrepresentation as to her value. As to these defences, see p 305, post, and pp 76-77, post. ° (1935) 53 LIL Rep 156 at 158. The effect of non-disclosure 69 there can be any question of affirmation; being put on inquiry is insufficient. Even when the insurer has full knowledge of the facts, he is still entitled to a reasonable time in which to decide whether to affirm the contract. In a situation in which the insurer has taken no action to affirm or repudiate the contract and a reasonable time for making up his mind has elapsed, he will be deemed to have affirmed the contract if either so much time has elapsed that the necessary inference is one of affirmation or the assured has been prejudiced by the delay in making an election or rights of third parties have intervened.'° It is not necessary to the exercise of the right of election that the fact which is not disclosed should be in any way connected with, or have any influence upon, the loss. The right to avoid the policy exists because the material facts have not been within the knowledge of both parties at the time of effecting the insurance. When the fact in question comes to the knowledge of the insurer, he is in a position to affirm the contract if he so desires. The influence of the fact which is not disclosed upon the loss has no bearing on the question as to whether there is a valid contract or not, and therefore the right of the insurer to avoid the contract is not affected thereby.'* Thus, in Rivaz v Gerussi'* an assured effected a number of insurances by taking out floating policies for certain named sums to cover shipments to be declared and valued ‘as interest might appear’. The policies were to succeed each other in order ofdate, but the value of the shipments was systematically and fraudulently understated by the assured. The fact that they had been so undervalued was not disclosed to the insurer. This was held to be a ground on which the insurer could avoid the contract, although there could be no possible connection between the value of a shipment and the cause of its loss. G BROKER’S LIABILITY TOWARDS FOR NON-DISCLOSURE THE INSURER Cases in the early part of this century established the principle that an insurer could not hold a broker liable for innocent non-disclosure of amaterial fact.'? In Empress Assurance Corpn Ltd v C T Bowring & Co Lid ‘4 a firm of insurance brokers effected with an insurance company a number of open covers for the purpose of reinsuring risks taken by their principals. The premiums under the open covers were to be the same as those received by the original insurers less a brokerage to the firm. The brokers in declaring risks under the open covers stated definite amounts of premiums, without explaining what deductions had been made by the original insurers, their principals, in order to determine the rates received by them. In each case policies were drawn up by the company containing the premiums stated by the brokers. The insurance company, afterwards learning the facts, disputed the correctness of these deductions, and J). 10 Tiberian Insurance Agency Inc v Mosse [1977] 2 Lloyd’s Rep 560 at 565, QBD (per Donaldson Libercan In 169-170. pp 1979), edn, (4th Law Insurance of Principles General Ivamy, See further, the Insurance Agency Inc v Mosse (supra) it was held that a reasonable time had not expired. (See judgment of Donaldson J, [1977] 2 Lloyd’s Rep 560 at 565-566). 11 Dynch v Hamilton (1810) 3 Taunt 37; Seaman v Fonereau (1743) 2 Stra 1183. 12 (1880) 6 OBD 222. 594. 13 See further on this subject, Ivamy, General Principles of Insurance Law (4th edn, 1979), p 14 (1905) 11 Com Cas 107. 70 Non-disclosure sued the brokers for breach of duty to the company in not securing correct amounts of premium. The brokers had throughout acted in good faith. The Court held that the brokers owed no duty to the insurance company and could not be held liable on such a claim, even if negligence on their part were proved. Kennedy J, said that the defendants never became responsible to the plaintiffs as their agents or brokers. He knew of no case or legal authority which could be cited to show that the broker who was instructed to effect a marine insurance policy, either directly by the person intending to insure, or indirectly through another broker, became for any part of the business of effecting the insurance the agent also of the underwriter. If such were the case, the curious inference, he supposed, would follow that the knowledge of the broker would be the knowledge also of the underwriter. He could see no reason why there should be any difference where the insurance was effected by a system of open cover, as in the present case. Stress was laid by the plaintiffs on the fact that in the conduct of this business the defendants ought naturally to expect that the plaintiffs would rely on the accuracy of their declarations in regard to the attachment ofrisks and in regard to premiums. But the mere fact ofthe reliance of one person on the accuracy of the statements of another made to him in regard to a matter of business in which such reliance was natural enough, although not obligatory, was not of itself sufficient to make negligence on the part of that other person in regard to some statement made honestly but inaccurately an actionable wrong. In Glasgow Assurance Corpn Ltd v William Symondson & Co'> it was held that ifa broker disclosed the name of the ship and the perils affecting her, he could not be sued for negligence or for concealment of a material fact, if he did not state the name of the person interested in her who was desiring to insure or reinsure his interest. Scrutton J, said that it was never done in practice. The underwriter, when he entered into a policy insuring the broker as well in his own name as for and in the name of any other person, must expect to find the broker declaring his own interest or the interest of any other principal. If the underwriter wanted to know who was the assured, he must ask. It was true that the underwriter must have confidence in the broker to make such an agreement as was found in this case, but so he must have in every open cover where he reinsured part of risks of which he knew nothing except that they were to be written by someone else. No one had ever suggested in the latter case that the assured owed any duty of agency or selection to the underwriter, though without confidence such a contract would not be renewed. The plaintiffs alleged that the defendants concealed from them that three of the four partners constituting the defendants’ firm were underwriting members of Lloyd’s who underwrote policies on their behalf, and that they intended to place with the plaintiffs reinsurances of risks underwritten by such partners in their capacity as underwriters at a premium greater than that payable to the plaintiffs, and thereby to make profits greatly in excess of their agreed commission. Scrutton J, said that it was common knowledge in marine insurance that many brokerage firms in London had partners who were also underwriters at Lloyd’s, and that when an underwriter contracted with the brokers he might find them putting forward their own risks or those of the underwriting members as principals or other people’s risks as agents. 15 (1911) 16 Com Cas 109. CHAPTER 7 Misrepresentation 1 The duty of the assured Section 20(1) of the Marine Insurance Act 1906 states: ‘Every material representation made by the assured or his agent to the insurer during the negotiations for the contract, and before the contract is concluded, must be true. Ifitbe untrue the insurer may avoid the contract.’ A representation is either made spontaneously by the assured or in answer to questions put to him by the insurers. It is often found that the assured has made a representation with the object of inducing the insurer to accept the liability at a smaller premium than he would otherwise require, by impressing him with a more favourable view of the risk, or with the object of securing from him an insurance which would otherwise be refused. Between misrepresentation and non-disclosure there is this difference: that whereas in non-disclosure the undisclosed fact would tend to show the risk to be greater than it would otherwise seem to be, in cases of misrepresentation the fact so stated would make the risk appear smaller than it was in reality. It should be observed that s 20(1) of the Marine Insurance Act 1906 applies to any representation whether made by the assured or his agent. Thus, the assured is responsible for the representations made by his broker, and also for the truth of the information communicated to the broker by his agents, or communicated to himself by his agents and by him communicated to the broker, when such information is laid before the insurer as a statement of fact. If the assured desires to avoid the responsibility for the falsity of such information, he should take care that the insurer is told that the assured will not vouch for its truth.’ 2 The duration of the duty It should be noticed that the representation must be made ‘during the negotiations for the contract, and before the contract is concluded’. As to the time when the contract is concluded, s 21 of the Marine Insurance Act 1906 states: ‘A contract of marine insurance is deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the policy be then issued or not; and for the purpose of showing when the proposal was accepted, reference may be made to the slip or covering note or other customary memorandum of the contract.’ 1 Fitzherbert v Mather (1785) 1 Term Rep 12; Dennistoun v Lillie (1821) 3 Bli 202. 7) 72 Muisrepresentation 3 The test of materiality Section 20(2) of the Marine Insurance Act 1906 states: ‘A representation is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.’ 4 Construction of representation A representation must be construed according to its plain and accepted meaning, and need not necessarily receive a literal construction. Accordingly, when the ordinary commercial meaning is wider than the literal intepretation, neither the assured nor the insurer will be permitted to narrow the meaning of the words.* In construing a representation, regard must be had to any trade usage or to any special meaning which the words would convey to a person engaged in the class of business covered by the policy.* Section 20(4) of the Marine Insurance Act 1906 states: ‘A representation as to a matter offact is true, ifitbe substantially correct, that is to say, if the difference between what is represented and what is actually correct would not be considered material by a prudent insurer.’ Section 20(5) provides: ‘A representation as to a matter of expectation or belief is true if it be made in good faith.’ The question whether the representation is substantially correct is a question of fact for the jury, and will depend on the nature of the representation considered in reference to the risk and all the surrounding circumstances. Thus, in Pawson v Watson* the assured represented the ship carried 12 guns and 20 men. In fact, she carried 9 guns, 6 swivels, 16 men, and 9 boys. It was held that the representation was substantially correct. 5 Materiality is a question of fact The question whether the representation had a material bearing on the risk is a question of fact for the jury to determine. Thus, s 20(7) of the Marine Insurance Act 1906 states: ‘Whether a particular representation be material or not, is, in each case, a question of fact.’ One class of representation is nearly always material. This is the class which consists of answers to the questions put by the insurer. From the question itself the insurer is presumed to regard the fact as material, and since he is entitled to all the information which he requires before making a contract, the assured must answer it to the best of his ability, clearly stating whether the information is certain or uncertain, whether reliable or of doubtful authenticity. It is not necessary that such a fact should per se be material to or affect the ? Ratcliffe v Shoolbred (1780) 1 Park’s Marine Insurances (8th edn), p 413; Kirby v Smith (1818) 1 B& Ald 672. 3 Chaurand v Angerstein (1791) Peake 43; Anderson v Pitcher (1800) 2 Bos&P 164. * (1778) 2 Cowp 785. See also, Alexander v Campbell (1872) 27 LT 462; Driscol v Passmore (1798) 1 Bos& P 200; Driscol v Bovil (1798) 1 Bos& P 313; Nonnen v Kettlewell (1812) 16 East 176. Materiality 1s a question offact 73 risk. Accordingly, it will not avail an assured to show that a loss which has occurred is wholly unconnected with the fact misrepresented.° Where the representation is made fraudulently, it would seem that the question of materiality does not arise, and that it is sufficient to show that the nsurer relied on the representation and was thereby induced to accept the risk. Examples of material and immaterial misrepresentations In Fillis v Brutton’ a broker was informed by the assured that the vessel was ready to sail on 24 December, and he represented to the insurer that she was in port. In fact, she had sailed on 23 December. It was held that the insurer was entitled to avoid the contract on the ground that the representation was a material one. Lord Mansfield CJ, said: ‘In all insurances it is essential to the contract that the assured should represent the true state of the ship to the best of his knowledge. On that information the underwriters engage.’ In Macdowall v Fraser® a broker represented to the underwriter that the vessel ‘was seen safe in the Delaware on 11 December by a ship which arrived at New York’. In fact, the vessel was lost on 9 December by running against chevaux de frise® placed across the river. The representation was held to be material, and the underwriter was held to be entitled to avoid liability. Lord Mansfield CJ, said:'® ‘The difference between the fact as it turns out and as represented must be material. The case of the Julius Caesar was very different from this. . . . It was only said what was meant to be done, and was done, though different, was as advantageous, or more so, than what had been represented.’ Other cases in which the representation made by the assured was held to be material concern statements that: . i . The vessel was American. Ati ii Goods were on board the ‘Socrates’, which was a new vessel, when, in iii fact, they were on board the ‘Socrate’, which was an old ship.'? The ship had a French licence to trade.** iv The vessel would sail with convoy.'* In Bowden v Vaughan'® the assured in an action on a policy on goods ‘at and from Lisbon to London’ had received a letter from Lisbon dated 27 October in which it was stated that the vessel would sail in a few days. The letter was not shown to the underwriters, but the broker made a statement to them to the > Seaman v Fonereau (1743) 2 Stra 1183; Lynch v Hamilton (1810) 3 Taunt 37. © Sibbald v Hill (1814) 2 Dow 263; The Bedouin [1894] P 1. 7 (1782) 1 Park’s Marine Insurances (8th edn), 414. 8 (1779) 1 Doug KB 260. ° Tron spikes set in timber to guard a wall. = ° (1779) 1 Doug KB 260 at 261. See also, Dennistoun v Lillie (1821) 3 Bli 202; Bowden v Vaughan (1809) 10 East 415. '! Steel v Lacy (1810) 3 Taunt 285. 12° Tonides v Pacific Fire and Marine Insurance Co (1872) LR 7 QB 517. 13° Feise v Parkinson (1812) 4 Taunt 640. 14 Edwards v Footner (1808) 1 Camp 530. 15 (1809) 10 East 415. 74 Misrepresentation same effect. Ifithad been stated that the vessel was not to sail in less than a month, the insurance could not have been effected, as the French army was daily expected at Lisbon. The representation was held material since the vessel did not sail until 29 November, and was stopped by the enemy on 30 November before she left the Tagus. The jury were of the opinion that the representation had been made bona fide and on probable expectation. On a motion for a new trial the Court took the same view, especially as the assured had no control over the event. In Hubbard v Glover'® the policy was on ship ‘at and from St Petersburg or Cronstadt to London’. The underwriters wanted a warranty to be included in the policy to the effect that the vessel was to sail before 1 August. The broker stated: “There is no occasion for that; the ship has sailed some time, and must now be off Gothenburg. There is a cargo ready for her, and she is sure to be an early ship.’ The policy was signed on 13 June 1811. The ship had reached Gothenburg some days before the conversation, and she performed the voyage to Cronstadt without any accident or delay; but the cargo was not ready, the first part ofitbeing sent alongside on 8 September. On 30 September she sailed homewards, and was wrecked on 11 November. Before she sailed from Cronstadt the winter risk had begun. Lord Ellenborough CJ, said that if the desired warranty had been introduced, the underwriters would have been discharged. But the representation was only a matter of conjecture and the subject of expectation and belief, and the underwriters were liable, although the delay quite changed the nature of the risk. In Brine v Featherstone'’ Gibbs J, said that there was a wide distinction between stating a fact and an opinion. What the broker had stated in that case was only an inference which he drew from the facts. If the underwriter did not inquire what the facts were on which the broker founded his conclusion, the fallacy of the conclusion did not avoid the policy. In Cantiere Meccanico Brindisino v Janson,'* which concerned a floating dock insured for a voyage from Avonmouth to Brindisi, the insurers refused to indemnify the assured in respect of her loss, alleging that there had been a misrepresentation during the negotiations of the policy, viz that she had been specially strengthened for the voyage. The Court of Appeal’? held that the misrepresentation had not been proved, and gave judgment for the assured.?° In Hamilton & Cov Eagle Star and British Dominions Insurance Co Ltd‘ the assured were a firm of produce merchants and importers, who had insured under an open cover in respect of consignments ofapples for 12 months from | July 1922, to 30 June 1923. During the negotiations for the insurance the assured’s broker stated that the clauses of the cover note, which the insurer was asked to quote for and which contained a ‘prolongation ofvoyage clause’,” were clauses which “© (1812) 3 Camp 313. = *7 (1813) 4 Taunt 869 at 870. See also, Dennistoun v Lillie (1821) 3 Bli 202; Anderson v Pacific Fire and Mare Insurance Co (1872) LR 7 CP 65. 484912) 107 LT 28 1'CA. *® Vaughan Williams, Fletcher Moulton and Buckley LJJ. 2° See the judgment of Vaughan Williams LJ (1912) 107 LT at 283, that of Fletcher Moulton LJ, ibid, at 284, and that of Buckley LJ, ibid, at 286. ‘ (1924) 19 LIL Rep 242, KBD. This clause stated: ‘In case of prolongation of the voyage over. . .days. . . to pay any damage to or deterioration of the apples.’ Materiality is a question offact 75 were in force in the existing policies of the assured. This was incorrect because such a clause had been deleted as from 20 April 1922, in the existing policies. The representation was an honest one, and had been made in good faith. A loss occurred, and the insurer sought to repudiate liability under s 20 of theMarine Insurance Act 1906 on the ground that there had been a misrepresentation of a material fact. Bailhache J, held that the defendant was entitled to do so, and said:3 ‘I decide this case upon the ground that there was an innocent misrepresentation; that the omission to state that the prolongation ofthe voyage clause had been deleted was an omission which made the statement that was made materially untrue, and made it untrue in a matter which was material to the consideration of the risk. If nothing has been said, nothing need be said: but if anything was to be said in this case, having regard to what was omitted, the fact ought to have been stated that the New Zealand Insurance Co had had this trouble about the prolongation of the voyage clause, and that that clause had been deleted.’ In Demetriades v Northern Assurance Co* a cargo had been insured for a voyage from Leith to Piraeus. The vessel on which it was loaded was a total loss off the Portuguese coast. When the assured claimed under the policy, one of the grounds” on which the insurers repudiated liability was that he was guilty of misrepresentation of a material fact, and that consequently the policy was voidable under s 20(1) of the Marine Insurance Act 1906. The vessel was, in fact, Greek owned but she was falsely certified as British and was falsely entered on the British register, and had been represented to the insurers as sailing under the British flag. The House of Lords® held that the insurers were entitled to avoid liability. The representation that the vessel was sailing under the British flag implied that she was entitled to be registered as a British ship, and this was untrue. Lord Sumner observed:’ “The representation that the Spathari was a British ship was ina sense true. She had been placed on the British Register ad hoc, but it was really an untruth, told, in my opinion so far as Mr Borthwick and Mr Demetriades are concerned, with intent to deceive. Under the Merchant Shipping Act the interest which Mr Demetriades had in her was such that the Spathart was not qualified to be placed on the British Register, and, when the facts became known, was liable to be seized and in due course forfeited to the Crown, with serious consequences to such persons as made or were privy to the making ofthe misleading declarations by which registration was obtained. To represent her to the underwriters as a British ship, when she never should have had the appearance ofa British ship and was liable to be removed at any time from the register, is in my opinion a misrepresentation of fact which was false to the knowledge of these two persons.’ In Williams v Atlantic Assurance Co Ltd® the assured stated that a cargo of textile goods was worth £8,000, but, in fact, it was worth only £250. Giving judgment in the Court of Appeal Slesser LJ, held obiter that the insurers were 3 (1924) 19 LIL Rep 242 at 246. * (1926) 21 LIL Rep 265, HL. > Another ground was that there had been non-disclosure of amaterial fact, viz a Greek interest in the vessel. As to this aspect of the case, see p 60, ante. © Viscount Cave LC, Lord Dunedin, Lord Shaw of Dunfermline, Lord Sumner and Lord Buckmaster. 7 (1925) 21 LIL Rep 265 at 269. See also, the speech of Viscount Cave LC, ibid, at 267, and that of Lord Shaw of Dunfermline, ibid, at 268. 8 [1933] 1 KB81, CA. 76 Maisrepresentation entitled to avoid liability on bs ground that there had been a misrepresentation, and observed:? ‘The misrepresentation that the goods were worth £8,000 when, in fact, they were worth, as I find, at any rate not more than £250, is an overvaluation so gross that it is calculated to influence and must, in fact, have influenced the underwriters in taking the risk. The misrepresentation . . . is apparent on the face of the documents, and, if Iam wrong on the technical question of assignment,'° I hold that under s 20 of the 1906 Act, the underwriters were entitled to avoid the contract for an untrue material misrepresentation. That is to say, I find the value which was declared at £8,000 to have been, in fact, £250 and no more.’ In Neue Fischmehl Vertriebs-Gesellschaft Haselhorst mbH v Yorkshire Insurance Co Ltd'' the assured insured an old steamer, which was used as a shrimp drying factory, for a voyage in the tow ofa tug from Friedrichskoog to Cuxhaven and while there for a period of 10 days. She started on her voyage, and after getting not more than 100 yards from Friedrichskoog, the tug anchored her and went back to Cuxhaven intending to return when the weather was more favourable. The steamer was then towed by some fishermen who anchored her. When the tide fell, she grounded and broke her back. The assured claimed for a constructive total loss. The insurers refused to indemnify the assured on the ground that there had been a material misrepresentation in that the assured had stated that the vessel was of extraordinary stable construction ‘and had been fully overhauled in 1926 and rebuilt most solidly and strengthened by iron beams’, whereas those statements were not true.!? MacKinnonJ, held that this defence succeeded, and that the action failed.'* The misrepresentations which had been made were material. The iron beams had been put in to support a factory which was put on deck. The work had not been done for the purpose of strengthening the hull as a floating and waterresisting structure. Further, she had not been fully overhauled, nor was it true to say that she was rebuilt.'* In Wilmott v General Accident Fire and Life Assurance Corpn Ltd‘* a motor boat, which was insured under a time policy, sank during a gale while lying at moorings off Anchor Head near Weston-super-Mare. The assured claimed for a total loss. One ofthe defences'® pleaded by the insurers was that he had made a material misrepresentation as to the boat’s value. BransonJ, held that this defence failed, and that the action succeeded. The incorrect answer made by the assured as to the value of the vessel was probably due to the fact that he was incorrectly questioned by the insurers’ agent, who himself completed the propos form. His Lordship observed: ° Ibid, at 42. '° As to this point, see pp 315-316, post. 4 (1934) 50 LIL Rep 151,*KBD. '2 The insurers also maintained that the vessel was unseaworthy. As to this aspect of the case, see p 300, post. "3 (1934) 50 LIL Rep 151 at 153. As to the evidence, see ibid, at 153. *S (1935) 53 LIL Rep 156, KBD. ‘© Other defences pleaded by the insurers were that the vessel was unseaworthy, and that the assured had not disclosed a material fact. As to these defences, see p 305, post and p 68, ante. , Tespectively. 7 (1935) 53 LIL Rep 156 at 159. Materiality is a question offact 77 ‘Neither Mr Willmott nor Mr Gibbons in giving their evidence were really clear in the distinction between the questions, ‘““What price did you pay?” or, ‘What did the motor boat cost you?” or, ““What was the value of the motor boat?’’. Mr Gibbons when he was in the box said first of all: “I asked him the value,”’ and then, ‘‘I asked him the price.” I said to him, “What did you do; did you ask the value or the price?”’, and he said “‘I read out the questions.” Now, that shows that in his mind to ask the value is equivalent to reading out the questions, and, if that is so, how can I be sure when he put the words in front of Mr Willmott “‘price paid by you’”’, he did not look up from the questionnaire and say: ‘‘How much did it cost?” and that is what Mr Willmott said he did say. Mr Willmott said: ‘‘He asked me what is the cost,”’ and, further, Mr Willmott said, ““There would have been no excuse for saying the price I paid was £200, because I had not paid £200, but when the question was: “‘what did it cost you?”, I thought it right and fair to add up what I had paid for the hull, the shafting, the engine, the repanelling and the re-decking, etc, ofthis craft, and that plus an addition for wages and a profit on the wages for any men who were used out of my own business for this purpose, was not unfairly stated.” It would have been obviously a most fraudulent thing for him, if the question put to him had been: ‘‘What was the price paid by you?”’ to have responded “£200”, but one can see how an honest man in the circumstances might have answered the question: ‘“‘What did they cost you?”’ by the sum of £200, and I find that that was the answer Mr Willmott gave. The result is that upon that ground also I think the defence fails and the plaintiffisentitled to recover.” In Slattery v Mance'® the assured stated that the value of the insured yacht was £4,500. The jury found that this representation was material and false, for a month before it had been made he had said that he would be willing to accept an offer of £2,250 for her from a prospective buyer. SalmonJ, accordingly held that the insurer could avoid liability. In Liberian Insurance Agency Inc v Mosse’? a cargo described as ‘enamelware (cups and plates) in wooden cases’ was insured for a voyage from Hong Kong to Monrovia, and arrived in a damaged condition. Donaldson J, held that the insurers could avoid liability on the ground that the assured had made material misrepresentations as to the state of the cargo in that (i) the cargo included 823 cartons as contrasted with wooden cases; (ii) a significant proportion of the enamelware had been touched up by overpainting; and (iii) the cargo was an end of stock or job lot purchase and had been bought at a cheap rate. In Container Transport International Inc and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd? a statement concerning the claims record of the assured was held by the Court of Appeal’ to be material, and since the statement was untrue, the insurers were entitled to repudiate liability.” 6 Withdrawal or correction of representation Section 20(6) of the Marine Insurance Act 1906 states: ‘A representation may be withdrawn or corrected before the contract is concluded.’ . . . 3 18 [1962] 1 QB 676. The evidence as to the overvaluation is set out ibid, at 67-70. The jury found that the representation by the assured had not been made fraudulently. 19 11977] 2 Lloyd’s Rep 560, QBD. (See the judgment of Donaldson J, ibid, at 565.) The learned Judge also held that the insurers could avoid liability under the Marine Insurance Act 1906, s 18 for there had been non-disclosure ofmaterial facts as to the state of the cargo in the respects mentioned above. See p 62, ante. 20 [1984] 1 Lloyd’s Rep 476, CA. 1 Stephenson, Kerr and Parker LJJ. 2 See the judgment of Kerr LJ: [1984] | Lloyd’s Rep 476 at 500. 3 As to the time when the contract is deemed to be concluded, see Marine Insurance Act 1906, s 21, and p 71, ante. 78 7 Muisrepresentation Representation to the first underwriter Whether a representation made to the first underwriter, should it prove to be untrue and material, is available to enable subsequent underwriters to avoid the contract is not clear. In Barber v Fletcher* Lord Mansfield CJ, said:° ‘It has certainly been determined in a number ofcases that a representation made to the first underwriter extends to the others.’ In Forrester v Pigou® Lord Ellenborough CJ, expressed some doubt on the point, while in Robertson v Marjoribanks’ Abbott CJ, ruled that evidence of a communication to the first underwriter was only admissible when it was for the benefit of all the underwriters, by showing the risks to appear less than they would otherwise seem to be. He rejected the evidence of such a communication when it showed the risks to be greater. In other words, the evidence might be given when it minimised the risks, but not when it burdened the underwriter by increasing them. There is no modern reported case in which the rule that a representation made to the first underwriter is available to subsequent underwriters, and no reference is made to any such rule in the Marine Insurance Act 1906. —— 8 Effect of misrepresentation Where the representation turns out to be untrue, the insurer will be entitled to avoid the contract.® His right to avoid the contract, however, must be exercised with the same promptitude as in cases of non-disclosure, for the reasons already pointed out in that connection.” 9 Burden of proof Misrepresentation is usually set up by the insurer as a defence to an action on the policy, and on him therefore will rest the burden of prose and the misrepresentation relied on must be established very clearly. 10 Evidence The rate of oa underwriter. affords some guidance as to the risk assumed by the * (1779) 1 Doug KB 305. See also, Pawson v Watson (1778) 2 Cowp 785; Bell v Carstairs (1810) 2 Camp 543; Marsden v Reid (1803) 3 East 572. > (1779) 1 Doug KB at 306. © (1813) 1 M&S 9 at 13. 7 (1819) 2 Stark 573. 8 Marine Insurance Act 1906, s 20(1). See p 69, ante. 1° Davies v National Five and Marine Insurance Co ofNew Zealand [1891] AC 485. See also Elkin v Janson ae a 655. See further, Ivamy, General Principles of Insurance Law (4th Edn, 1979), pp | 196 ‘! Bridges v Hunter (1813) 1 M&S 15. See also, Ivamy, op cit, p 195. Evidence 79 The ‘slip’ pe be looked at in order to show whether the representation was a material one. ~Evidence as to whether a fact is material or not may be given by experts in insurance business accustomed to fixing premiums in accordance with the risks.*? ‘2 Cory v Patton (1874) LR 9 QB 577; Lower Rhine and Wurtemburg Insurance Association v Sedgwick [1898] 1 QB 739 at 747. 13 Seaman v Fonereau (1743) 2 Stra 1183 at 1185; Berthon v Loughman (1817) 2 Stark 258 at 259; Carter v Boehm (1766) 3 Burr 1905; Rickards v Murdock (1830) 10 B&C 527. CHAPTER 8 The premium!’ The premium is the consideration which the insurers receive from the assured in exchange for their undertaking to pay the sum insured in the event insured against.” A THE AMOUNT OF THE PREMIUM The amount of the premium may be fixed when the contract is made. But sometimes the amount of the premium is to be arranged later.* Again, the parties may arrange to pay an additional premium in certain events, eg if there has been a change of voyage.* Thus, clause 10 of the Institute Cargo Clauses (A)° states: ‘Change of Voyage Clause. Where after attachment of this insurance, the destination is changed by the Assured, held covered at a premium and on conditions to be arranged® subject to prompt notice being given to the Underwriters.’ In cases where no arrangement has been made as to the amount of the original premium, s 31(1) of the Marine Insurance Act 1906 states: ‘Where an insurance is effected at a premium to be arranged, and no arrangement is made, a reasonable premium is payable.’ Where the parties have not agreed on the amount ofan additional premium, s 31(2) of the Act provides: ‘Where an insurance is effected on the terms that an additional premium is to be arranged ina given event, and that event happens but no arrangement is made, then a reasonable additional premium is payable.’ In Hewitt v London General Insurance Co Ltd’ a cargo of nitrate was insured for a voyage from Tocopilla to La Pallice, France, via the Panama Canal. The policy contained a clause which stated: ‘In the event of the voyage being changed or of any deviation from the terms ofthis policy, the same to be held covered at premium to be arranged hereafter.’ See further, Ivamy, Genéral Principles ofInsurance Law (4th edn, 1979), pp 197-222. Ibid, p 197. Ibid, p 198. See pp 127-129, post. These clauses are set out in Appendix III, pp 516-519, post. The word ‘arranged’ means ‘agreed or, in default of agreement fixed by an arbitrator or by the FF oe An wWwN court.’: Liberian Insurance Agency Inc v Mosse [1977] 2 Lloyd’s Rep 560 at 568 (per Donaldson J). An assured can rely on such a clause only if the premium to be arranged would be such as could properly be described as a reasonable commercial rate: ibid, at 568. See p 109, post. 7 (1925) 23 LIL Rep 243, KBD. 80 The amount of the premium 81 The insurers of the cargo reinsured their risk under a reinsurance policy, which was expressed to be subject to the same terms, clauses and conditions contained in the original policy. The vessel sailed on her voyage and called at Colon, which was on the contractual route, but there she was ordered to go to New Orleans. She deviated to get to that port, and after sailing from there some weeks later was lost with all her cargo. One of the issues® which arose for decision in the action brought against the reinsurers by the insurers, who had paid the original assured for a total loss, was whether the reinsurers were entitled to the payment of an additional premium. Branson J, held that they were not entitled to such payment. He said that the rule for the ascertainment of an extra premium in such a case was laid down in Greenock SS Co v Maritime Insurance Co Ltd.? This test was that the parties must assume that the breach was known to them at the time when it happened, and ascertain what it would then have been reasonable to charge. Applying this test to the present case, he observed:'° “The evidence as to the usual course of a voyage to France from Colon was very slight. It depends on the bunkering capacity of the vessel in question and the price of coal at various ports which might be used to provide coal. A steamer might go to a coaling port on the Atlantic seaboard of the US or to the French West Indies. So in view ofall the evidence and although the putting in to New Orleans was clearly a deviation, it was not in my opinion at all a serious one. It is said to have lengthened the voyage by some 500 miles. The voyage was 5,000 miles so the lengthening was in my opinion not more than 10 per cent of the total. The policy subscribed by [the insurers] permits of much greater variations in the voyage than this without any change of premium. It was stated and not denied that upon the original policy no extra premium was asked in respect of the deviation, because it was considered that the deviation did not cause any materia] addition to the risk.’ In Alluvials Mining Machinery Co v Stowe’’ 68 barrels of kerosene were insured from a port in the United Kingdom to some mines in Nigeria. The policy contained a clause stating: ‘Held covered on premium to be arranged in case ofdeviation or change or other variation of risk by reason of the exercise of any liberty granted to the shipowner or charterer, etc.’ The assured had arranged for the cargo to be carried as deck cargo. The barrels contained 2,135 gallons of oil, but only 200 gallons arrived at the mines. The assured contended that the loss fell within the clause set out above on the payment of an additional premium. But the insurer repudiated liability on the ground that there had been no ‘variation of risk’ within the meaning of the clause. Greer J, held that this defence succeeded, and gave judgment for the insurer.'* He observed :'? 8 Other issues were whether the risk had attached, and whether the original assured had an insurable interest at the time ofthe loss. As to these aspects ofthe case, see pp 467-468, post, and pp 117-118, post, respectively. ° [1903] 1 KB 367 at 375 (per Bigham J). See also, Mentz, Decker & Co v Maritime Insurance Co Ltd (1909) 15 Com Cas 17 at 26 (per Hamilton J). '0 (1925) 23 LIL Rep 243 at 246. 11 (1922) 10 LIL Rep 96, KBD. 12 His Lordship also held that the action failed on the ground that there had been non-disclosure of a material fact, ie that the goods were carried on deck. As to this point, see p 65, ante. 13 (1922) 10 LIL Rep 96 at 97. 82 The premium ‘In order to come within this clause it is necessary to decide if the risk which arises from the peril of being loaded on deck and carried on deck was a variation ofthe risk by reason of the exercise of any liberty granted to the shipowner. It seems to me there was no variation ofrisk on this voyage at all, because the risk from the start to the end of the contract of carriage was a risk of goods to be loaded on deck. The facts are not in dispute. On 12 July the goods were handed to the shipowner for carriage upon the terms ofa shipping note which says:“‘Please receive from Messrs Holt & Co, and ship per steamship Gamba the following goods,” and here the goods are described: “being barrels of paraffin on deck at shippers’ risk”. Thus from the very commencement of the contractual relations between the plaintiffs, and the shipowners there was a consent on the part of the [assured] and an agreement between the parties that the goods were to be carried on deck, and there never was any variation of that risk from the beginning of the transaction to the end... . There was not, in my judgment, a variation in the risk at all; or, rather, there was no variation of the risk by reason of the exercise of any liberty granted to the shipowner. There was no liberty granted to the shipowner in the contract of affreightment to carry these goods on deck, in the sense of the words that he was free to carry them on deck, because it was part of the contract to carry on deck. I think those words mean the contract of carriage is for ordinary carriage of goods in the usual place and way, but there are liberties reserved to the shipowner to vary that from time to time in certain ways, and the facts in this case do not show any exercise ofliberty to vary that risk within the meaning of the words.’ B THE TIME FOR PAYMENT OF THE PREMIUM Section 52 of the Marine Insurance Act 1906 states: ‘Unless otherwise agreed, the duty ofthe assured or his agent to pay the premium and the duty ofthe insurer to issue the policy to the assured or his agent, are concurrent conditions, and the insurer is not bound to issue the policy until payment or tender of the premium.’ C THE RESPONSIBILITY FOR PAYMENT OF THE PREMIUM Section 53(1) of the Marine Insurance Act 1906 states: ‘Unless otherwise agreed, where a marine policy is effected on behalf of the assured by a broker, the broker is directly responsible to the insurer for the premium... .’ D THE EFFECT OF ACKNOWLEDGMENT THE PREMIUM'* OF RECEIPT OF Section 54 of the Marine Insurance Act 1906 states: ‘Where a marine policy effected on behalf ofthe assured by a broker acknowledges the receipt of the premium, such acknowledgment is, in the absence of fraud, conclusive as between the insurer and the assured but not as between the insurer and the broker.’ a E THE RETURN OF THE PREMIUM!® In some cases the right of the assured to a return of the premium is expressly set '* See further, Ivamy, General Principles 6fInsurance Law (4th edn, 1979), pp 203-204. "S See further, Ivamy, op cit, pp 212-222. The return of the premium 83 out in the terms of the policy. He can also claim that the premium be returned to him by the insurer where there has been a failure of consideration. The enforcement of the right to a return will vary according to whether the premium has been paid or not. The insurer remains directly liable to the assured for its return. 1 Return of premium by agreement Section 83 of the Marine Insurance Act 1906 states: ‘Where the policy contains a stipulation for the return of the premium, or a proportionate part thereof, on the happening of a certain event, and that event happens, the premium, or, as the case may be, the proportionate part thereof, is thereupon returnable to the assured.’ Policies contain various provisions for the return of premium. Thus, clause 22 of the Institute Time Clauses (Hulls) sets out a very detailed provision as to the return of the premium where the vessel is laid up in port or is under repair.'® Similar provisions are to be found in clause 16 of the Institute Time Clauses (Freight).'7 The meaning of the expression ‘laid up in port’ was considered in North Shipping Co v Union Marine Insurance Co,'® where it was held that the evidence established a custom that the words were extended to cover various operations in port, which might occur in the normal course of discharging. But they did not cover the case of a vessel remaining in port for a considerable time with steam up and being moved from time to time for the purpose of supplying coal to various ships in the port. In Hunter v Wright’? a clause in the policy stated that the premium was returnable if the vessel was ‘sold or laid up’. After being laid up for several months she was again employed during the currency of the policy. It was held that no premium was returnable on the ground that the clause did not cover a temporary laying up. In Pymanv Marten,*° where the premium was returnable if the vessel was sold or transferred to new management, it was held that her capture did not satisfy this condition, and that the premium could not be claimed by the assured. Clauses providing for the return of premium on condition that the vessel is not employed in certain trades or areas are also found.’ Ifin a time policy there is a provision for a return of premium in respect of the time unexpired, and that premium is returned, the effect is to cancel the policy for that unexpired period and to prevent the assured from recovering any loss which takes place during the time in respect of which the premium has been returned.” Where the vessel is in safety in port during a portion ofthe time insured, there is no right to a return of premium for that portion of time, in the absence of an express provision in the policy.* 16 See pp 539-540, post. 17 See pp 553-554, post. 18 (1919) 24 Com Cas 161, CA. 19 (1830) 10 B&C 714. 20 (1906) 13 Com Cas 64. 1 Eg Gorsedd SS Co Ltd v Forbes (1900) 5 Com Cas 413. 2 Baines v Woodfall (1859) 6 CBNS 657. 3 Loraine v Thomlinson (1781) 2 Doug KB 585. 84 The premium 2 Return of premium for failure of consideration The circumstances in which, apart from an express provision in the policy, a return of premium may be claimed, are set out in s 84 of the Marine Insurance Act 1906: ‘(1) Where the consideration for the payment of the premium totally fails and there has been no fraud or illegality on the part of the assured or his agents, the premium is thereupon returnable to the assured. * (2) Where the consideration for the payment of the premium is apportionable and there is a total failure of any apportionable part of the consideration, a proportionate part of the premium is, under like conditions, thereupon returnable to the assured. (3) In particular— a Where the policy is void, or is avoided by the insurer as from the commencement of the risk, the premium is returnable, provided that there has been no fraud or illegality on the part of the assured; but if the risk is not apportionable, and has once attached, the premium is not returnable; b Where the subject-matter insured, or part thereof, has never been imperilled, the premium, or, as the case may be, a proportionate part thereof, is returnable: Provided that where the subject-matter has been insured “lost or not lost”, and has arrived in safety at the time when the contract is concluded, the premium returnable unless, at such time, the insurer knew of the safe arrival; is not c Where the assured has no insurable interest throughout the currency of the risk the premium is returnable, provided that this rule does not apply to a policy effected by way of gaming or wagering; d Where the assured has a defeasible interest which is terminated during the currency ofthe risk, the premium is not returnable; e Where the assured has over-insured under an unvalued policy, a proportionate part of the premium is returnable; Jf Subject to the foregoing provisions, where the assured has over-insured by double insurance, a proportionate part of the several premiums is returnable: Provided that, if the policies are effected at different times, and any earlier policy has at any time borne the entire risk, or ifa claim has been paid on the policy in respect of the full sum insured thereby, no premium is returnable in respect of that policy, and when the double insurance is effected knowingly by the assured no premium is returnable.’ Fraud Where the assured is guilty of fraud in procuring the policy, although Me contract will on that account be voidable, the premium is not returnable.* The assured may, on the other hand, recover the premium if the insurer is guilty of fraud.° Illegality Where the contract is illegal and by reason of such illegality the policy is void, the Courts will not assist either of the parties where both of them are in pari delicto, and will neither enforce the contract to pay nor compel the return of the premium if it has been paid and the risk has commenced. Indeed, it would seem that the premium cannot be recovered back even ifthe risk has never commenced, unless perhaps the assured clearly and at an earlier date repudiates the illegal contract.’ Feise v Parkinson (1812) 4 Taunt 640. Duffell v Wilson (1808) 1 Camp 401. Vandyck v Hewitt (1800) 1 East 96; Morck v Able (1802) 3 Bos&P 35. Palyart v Leckie (1817) 6 M&S 290. Ya nw The return of the premium 85 Again, the premium will not be returned when the assured materially alters the policy without the consent of the insurer, although such an alteration will render the policy void.® Short interest When the interest is short, eg where a full cargo is insured and only half of it is shipped, the assured is entitled to a return of the premium proportionate to the shortage.” Thus, in The Main’® a proportionate part of the premium was ordered to be returned where a payment on the valuation in the policy was ordered to be reduced in an equal ratio to the actual amount at risk. Double insurance In the same way premiums on the amount of double insurance have been ordered to be returned. Thus, in Fisk v Masterman'' an insurance was effected on 12 April by five policies at 50 gns per cent on a cargo of cotton then at sea. On 13 April, news having arrived that the ship was safe, a further insurance was bona fide effected by six different policies at 10 gns and 5 gns per cent. The first set of policies alone did not exceed the value of the interest, but both sets together did exceed it. It was held that the assured were entitled to a return of premium on the double insurance from the insurer on the second set in proportion to the sums insured by them on 13 April, but no return of premium was to be made by the insurers in respect of the first set. The reason was that the first group of insurers might have been liable on their policies, the vessel having sailed on 8 February and being overdue. If all the policies had been effected on 12 April there would have been a proportionate return by all the insurers. Effect of risk never attaching Where, as may happen, some error or misunderstanding results in no risk being run, the insurer must return the premium. Thus, in Stevenson v Snow’? Lord Mansfield CJ, said:** ‘Equity implies a condition that the insurer shall not receive the price of running a risk if he runs none.’ Accordingly, the premium will be returnable if the assured insures goods on the wrong ship by mistake.'* Effect of attachment of risk In Stone v Marine Insurance Co Ocean Ltd of Gothenburg'” a ship was bound for 8 Langhorn v Cologan (1812) 4 Taunt 330. 9 Forbes v Aspinall (1811) 13 East 323; Rickman v Carstairs (1833) 5 B& Ad 651; Tobin v Harford (1864) 17 CBNS 528. 10 [1894] P 320. 'T (1841) 8 M&W 165. 2 (1761) 3 Burr 1237. "3 Tbid, at 1240. 14 Martin v Sitwell (1691) 1 Show 156. 15 (1876) 1 ExD 81. 86 The premium Antwerp with a cargo of wheat, and the parties, not knowing her destination and believing her to be at sea, endorsed on the policy leave to change the destination and to allow the ship to go to Antwerp on payment of an additional premium. On that day the ship was in the outer dock at Antwerp, but had not finished her voyage, having yet to go into the inner dock to discharge her cargo. It was held that the insurers were entitled to retain the additional premium since the risk had attached. a Again, in Bradford v Symondson'® where a vessel was overdue, the insurers on cargo reinsured it ‘lost or not lost’ at a heavy premium. The vessel had, in fact, arrived safely. It was held that the reinsurer was entitled to the agreed premium as the risk had attached. 3 Enforcement of return Section 82 of the Marine Insurance Act 1906 states: ‘Where the premium, or a proportionate part thereof, is, by this Act, declared to be returnable— a If already paid, it may be recovered by the assured from the insurer; and b If unpaid, it may be retained by the assured or his agent.’ 4 Direct responsibility of the insurer to the assured Section 53(1) of the Act states: ‘Unless otherwise agreed, where a marine policy is effected on behalf of the assured by a broker, .. . the insurer is directly responsible to the assured for the amount which may be payable in respect of... returnable premium.’ —$—— *© (1881) 7 QBD 456. ee eee PART II The policy CHAPTER 9 Introduction There are various ways in which policies may be classified, eg (i) voyage policies and time policies; (ii) valued policies and unvalued policies.’ The form and contents of the Lloyd’s policy are substantially the same as those of a policy issued by a marine insurance company.” The subject-matter insured must be designated in the policy with reasonable certainty. The policy specifies the attachment and duration of the risk,* and lists the perils insured against.” A policy may provide cover in respect of war and strikes risks.° Certain risks are covered by Protection and Indemnity Associations.’ A number of risks which the insurer is not willing to bear are excluded from the cover provided by the policy.® The policy may be determined by the parties, or cancelled by the insurer, eg where he has been induced by fraud on the part of the assured to issue it.” If the policy contains terms which have not been agreed upon by both parties, it may be rectified.'° If amaterial alteration of the terms of the policy is made by the assured without the consent of the insurer, the insurer is entitled to avoid liability under it."? The policy often contains a promissory warranty, eg a warranty by which the assured undertakes that some particular thing shall or shall not be done, eg that the insured vessel will sail by a specified date.*? Policies of marine insurance can be assigned where there is no provision in them to the contrary.'* There are various rules relating to the construction of a policy.** After the policy has been effected by him, a broker has certain duties, authority and rights.*® See Chapter 10, post. See Chapter 11, post. See Chapter 12, post. See Chapter 13, post. See Chapter 14, post. See Chapter 15, post. See Chapter 16, post. orI FF Aw WN See Chapter 17, post. See Chapter 19, post. See Chapter 20, post. See Chapter 21, post. See Chapter 18, post. See Chapter 22, post. See Chapter 23, post. ee See OO = wn wr See Chapter 24, post. 89 CHAPTER 10 The classification of policies Policies are sometimes classified according to the subject-matter insured, eg a hull policy, a goods policy, a freight policy. Another classification is into lawful policies and ‘honour policies’, ie those not legally enforceable but binding in honour only. A major division, however, is that of ‘voyage’ policies,” ‘time’ policies* and ‘mixed’ policies.* Where the insurance is described in general terms and leaves the name of the ship and other particulars to ue defined by subsequent declaration, the policy is known as a ‘floating’ policy.° Another method of classification is that of ‘valued’ and ‘unvalued’ policies.® A VOYAGE, TIME AND MIXED POLICIES Voyage policy Section 25(1) of the Marine Insurance Act 1906 states: ‘Where the contract is to insure the subject-matter ‘“‘at and from’’, or from one place to another or others, the policy is called a (73 ‘‘voyage policy”’.’ Thus, a vessel may be insured ‘at and from London to New York’, or ‘from Liverpool to Calcutta’. Again, goods may even be insured from ‘anywhere to anywhere’. ’ Time policy Section 25(1) of the Marine Insurance Act 1906 states: ‘Where the contract is to insure the subject-matter for a definite period of time the policy is called a “‘time policy’’.’ Thus, a vessel may be insured ‘for twelve months commencing | January 1985’. The word ‘definite’ means that the period must be specified. It is sufficiently specified if it specifies a stated period even though that period is determinable See infra. See infra. See infra. See p 91, post. See pp 91-93, post. See pp 93-100, post. F&F ADAwuW YA wN Fuerst Day Lawson Ltd v Orion Insurance Co Ltd [1980] 1 Lloyd’s Pen 656, OBD (Com Ct). 90 Voyage, tme and mixed policies on notice, and even though the insurance will be renewed automatically at the end of the period unless determined.® 91 or continued Mixed policy Section 25(1) of the Marine Insurance Act 1906 states: ‘A contract for both voyage and time may be included in the same policy.’ Such a policy is known as a ‘mixed’ policy, eg a vessel may be insured from London to Hong Kong and whilst there for 6 months.°? B FLOATING POLICIES ‘Floating’ policies are those in which the class of the subject-matter insured is named, and also the maximum limit of value fixed. But the specific things insured and their value individually have to be subsequently declared by the assured. Sometimes the vessel by which the goods are to be carried is not stated otherwise than ‘by ship or ships’, or by some suitable variation of this form, such as ‘by ship or ships’ of the Universal SS Co Ltd. das method of insuring is not modern. It was discussed by Magens in 1755. Section 29(1) of the Marine Insurance Act 1906 states: ‘A floating policy is a policy which describes the insurance in general terms, and leaves the name of the ship or ships and other particulars to be defined by subsequent declaration.’ Section 29(2) goes on to state: ‘The subsequent declaration or declarations may be made by endorsement on the policy, or in other customary manner.’ The advantages afforded to a merchant by ‘floating’ policies are obvious. Goods may be dispatched to him at his risk; and until he is notified by his consignor, he may be ignorant of the fact that the consignment has been 8 Compania Maritima San Basilio SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd: The ‘Eurysthenes’ [1976] 2 Lloyd’s Rep 171 at 177, CA (per Lord Denning MR). In that case the certificate of entry of a vessel in a mutual insurance association stated that the risk was to commence on 17 February 1972. By the rules of the association it attached until noon on 20 February 1972, when the policy year began, and continued thereafter from year to year until determined. It was still in existence in April 1974 when the vessel stranded. The Court of Appeal rejected the shipowners’ contention that the insurance was not for a ‘definite period of time’ because it continued indefinitely until determined by one side or the other. The association’s argument that the insurance was for a “definite period of time’ ie until 20 February 1972, and the fact that it continued after that date did not make it any the less a time policy was upheld. As to mutual insurance associations, see pp 475-479, post. ° See Wilson v Boag [1956] 2 Lloyd’s Rep 564 (NSW), where a motor launch was insured for 41 months while used within a limited radius, and a loss was sustained while on a voyage to a port outside the limits, and the policy was held to be a ‘time’ policy and not a ‘mixed’ policy; M Almojil Establishment v Malayan Motor and General Underwriters (Private) Ltd, The Al-JFubail IV [1982] 2 Lloyd’s Rep 637 (Sing CA), where a vessel was insured for 12 months from and on the voyage from Singapore to the Persian Gulf and whilst trading within the Gulf and it was held that the policy was a ‘mixed’ policy. (See the judgment of Lai Kew Chai J, ibid, at 640.) 10 For the general nature of this class of policy as described, see Blackburn J, in Jonides v Pacific Insurance Co (1871) LR 6 QB 674 at 682. 92 The classification of policies forwarded, and have no knowledge of its value or of the ship by which the carriage is effected. Nevertheless he is able to protect himself from the consequences of loss by effecting an insurance in the form of a ‘floating’ policy. Similarly, where a seller of goods has contracted to sell them cif over a period, he may decide to take out a ‘floating’ policy in respect of the various consignments which he may ship during the period of shipment allowed under the contract. ‘ Where a policy is effected on goods by ship or ships to be thereafter declared, the policy attaches to the goods as soon as, and in the order in which, they are shipped. Every shipment must be declared, for the assured is not entitled to be his own insurer as to some or any of the shipments.'! Section 29(3) of the Marine Insurance Act 1906 states: ‘Unless the policy otherwise provides, the declarations must be made in the order of dispatch for shipment. They must, in the case of goods, comprise all consignments within the terms of the policy, and the value of the goods or other property must be honestly stated, but an omission or an erroneous declaration may be rectified even after loss or arrival, provided the omission or declaration was made in good faith.’ The assured may correct any mistake in the declaration if there is no fraud, and the insurer is not prejudiced thereby.*? This right to correct the order of declarations in accordance with the order of shipment is binding on a company whose business is fire insurance, if as reinsurers they insure, against fire at sea, ships to be thereafter declared, for such a risk is a marine risk, and the principles of the law of marine insurance ] 13 Declarations must be made as early as possible, and the obligation to do so is epP NB . . . . . not dispensed with by a term in the policy requiring declarations to be made within a certain time of shipment from an intermediate port. Thus, in Davies v National Fire and Marine Insurance Co ofNew Zealand,'* in a 11 See Stephens v Australasian Insurance Co (1872) LR 8 CP 18; Dunlop Bros G& Co v Townend [1919] 2 KB 127. 12 See Robinson v Touray (1811) 3:Camp 158; Scott v Globe Marine Insurance Co Ltd (1896) Cas 370. 1 Com 13 Imperial Marine Insurance Co v Fire Insurance Corpn Ltd (1879) 4 CPD 166, where LopesJ, observed (at 171): ‘The defendants contended that they, the defendants, not being a marine insurance company, the usage stated in Stephens v Australasian Insurance Co (1872) LR 8 CP 18 did not attach. As the case depends mainly on whether this custom applies or not, it is convenient first to consider that question. I think it does. The argument is that the usage does not attach because the plaintiffs are insurers against marine risks, and the defendants are insurers against fire. It is conceded, however, that it is within the powers of the defendant company to reinsure against loss by fire in case of ships at sea. The plaintiffs here insure against perils by sea generally, and in order to ease their liability, they reinsure their risks in respect of coal-laden vessels for a limited amount in each case and in respect offire only, and between specified ports, with the defendants. The contract with the defendants is a contract of fire insurance no doubt, but a contract offire insurance in respect ofamarine risk. The defendants when they entered into that contract were doing the trade or business of marine insurance. The plaintiffs in the course of their business undertook certain marine risks, the defendants for their own benefit take upon themselves to indemnify the plaintiffs against one of those marine risks (being a risk against fire). It was a marine risk in the hands of the plaintiffs, and did not become less so when undertaken by the defendants. When the defendants contracted with the plaintiffs, they contracted with them according to the usage of the particular trade or business to which the contract related. It related to the trade or business of marine insurance. I think, therefore, the usage in Stephens v Australasian Insurance Co, supra, applies.’ ‘4 [1891] AC 485. Floating policies 93 floating policy on goods from Melbourne to Sydney per steamers of a named line, and from Sydney to London per steamers of another specified line, it was stipulated that declarations should be made within 48 hours after the departure of steamers from Sydney. It was held that this stipulation did not dispense with the necessity of declaring the risks from Melbourne to Sydney. Section 29(4) of the Marine Insurance Act 1906 states: ‘Unless the policy otherwise provides, where a declaration of value is not made until after notice ofloss or arrival, the policy must be treated as an unvalued policy as regards the subjectmatter of that declaration.’'* Although the declaration may ordinarily be made at any time, where the policy expressly provides a time for the making ofa declaration, thisamounts to a warranty, and non-compliance is unaffected by s 29(4) of the Marine Insurance Act 1906.'° Effect of fraud Fraud in regard to the declaration will render the policy voidable. Thus, in Rivaz v Gerussi'’ an assured effected a series of floating policies for certain named sums to cover shipments to be declared and valued as interest might appear. The policies were to succeed each other in order of date, but the value of the shipments was systematically and fraudulently under-stated by the assured. The fact that they had been so under-stated was concealed from the insurer. It was held that the policy was voidable. Where several policies exist Where the assured has effected two or more floating policies, one is usually expressed to be in succession to the other, and where this is the case, the shipments must be declared accordingly. But where there is no such provision, so that the interest may be covered by either policy, the assured may declare on either policy in respect of such interest.'® C VALUED AND UNVALUED POLICIES Section 27(1) of the Marine Insurance Act 1906 states: ‘A policy may be either valued or unvalued.’ Unvalued policies are, in fact, very rarely found. 1 Valued policies Valued policies are those in which the value ofthe thing insured is agreed on by the parties and the amount set out in the policies. ssa 15 See Gledstanes v Royal Exchange Assurance (1864) 5 B&S 797; Ionides v Pacific Fire and Marine Insurance Co (1871) LR 6 QB 674; Union Insurance Society ofCanton Ltd v George Wills & Co [1916] 1 AC 281. 16 Union Insurance Society ofCanton Ltd v George Wills & Co [1916] AC 281. 17 (1880) 6 QBD 222. 18 Kewley v Ryan (1794) 2 Hy Bl 343; Henchman v Offley (1782) 2 Hy BI 345n. 19 Bousfield v Barnes (1815) 4 Camp 228. 94 The classification of polices Thus, s 27(2) of the Marine Insurance Act 1906 provides: ‘A valued policy is a policy which specifies the agreed value of the subject-matter insured.’ Conclusiveness of valuation The value fixed by the policy is generally conclusive, but it is only binding on the parties and their assignees,”° for s 27(3) of the Marine Insurance Act 1906 states: ‘Subject to the provisions of this Act, and in the absence offraud, the value fixed by the policy is, as between the insurer and assured, conclusive of the insurable value ofthe subject intended to be insured, whether the loss be total or partial.’ Thus, in The Main’ a policy was effected on freight valued at £5,500, the valuation having been made in accordance with the rates of freight then current. The ship, however, met with an accident, and in consequence of her detention in port for repairs some engagements for cargo had to be cancelled. Meanwhile freight rates declined considerably, and when the ship sailed, she carried a freight of only £3,250. On a claim for a total loss it was contended by the insurers that, having regard to the fall in freight rates, the valuation could be opened, or at all events payment should be made only on the freight actually risked, which was £3,250 less £952 paid in advance. It was held that the parties were bound by the valuation. Again, in Barker v Janson? a ship suffered damage which made her a constructive total loss, but neither party knew it, and a time policy was effected on her for £8,000, during the currency of which she was totally lost. It was held that the value ‘vas conclusive, there being no fraud. In Woodside v Globe Marine Insurance Co” the valuation in a marine policy against ‘fire’ was held to be binding where the vessel, having been damaged by stranding to such an extent as to become a constructive total loss, was afterwards totally destroyed by fire, although the insurers were not liable on the policy for a loss by stranding. In Thames and Mersey Marine Insurance Co v Pitts, Son and King,* where goods were valued at £7,940, including £1,360 for advance on freight, it was held that £7,940 was the true value of the goods and that, although it included a sum for advance on freight, those words only helped to show the way in which the parties had arrived at the valuation. Further, the inclusion of freight in the value of the goods did not affect the principle that calculations for payment in the event of loss must be based on the valuation contained in the policy. For the purpose of estimating particular average losses it was not permissible to deduct the advance freight from the value of the goods and to treat such advance freight as a separate insurance. a 20 The valuation has no other effect, notwithstanding the judgment of Lord Campbell CJ, in Irving v Manning (1847) 1 HL Cas 287, where he said that the valuation was ‘for all purposes’, and that of Mellor J, in North ofEngland Iron SS Insurance Association v Armstrong (1870) LR 5 QB 244, where he said that ‘all questions as to the mutual rights of the assurer and the assured must be governed by the value stated in the policy’. ' [1894] P 320. ? (1868) LR 3 CP 303. > [1896] 1 QB 105. * [1893] 1 QB 476. Valued and unvalued policies 95 The valuation of freight in a valued policy may be opened if the ship does not carry the whole of the goods, but only a part.” Where the insurance was on charterer’s profit-freight valued at £2,000, the assured was only allowed to recover the difference between the chartered freight and the bills of lading freight, which difference amounted to £790.° In General Shipping and Forwarding Co v British General Insurance Co Ltd’ a vessel was insured for £2,000 in December 1921 under a policy in which she was valued at £5,000. In fact, her market value was about £1,500. She became a total loss on 23 September 1923 near the Skerries during the currency of the policy. The assured claimed £2,000 under the policy, but the insurers repudiated liability on the ground that she was grossly overvalued.® It was held that the claim succeeded. Although the vessel was considerably over-insured, probably to the extent of twice her value,” the insurers were just as able to estimate her market value as her owners were. There was no fraud, and under s 27(3) of the Marine Insurance Act 1906 the value fixed by the policy was conclusive. Bailhache J, observed:'° “Now it is sought to reopen the valuation upon the ground of excessive insurance. In considering that one must bear in mind that this was an insurance ofhull and machinery and not an insurance of goods. One must bear in mind that the underwriter had at his hand in Lloyd’s Register of ships all the information about the Borre that the owners had, except, of course, the price at which she had changed hands, and the circumstances under which she became the property of the Janet SS Co. The defendants had been on the risk twice before; and on this third occasion they increased their risk to £2,000. The underwriters were just as well able in my judgment to estimate what the market value ofthe Borre was as were the people who owned her; and with all the information before them and the same possibilities of estimating her value they chose to accept this valuation and to make a contract on these terms and to take premiums on this valuation of £5,000. Now they seek to upset it on the ground that it is an over-valuation so excessive as to entitle them to be off the risk. Now, where the subject-matter ofthe case is goods, the matter is on a different footing. There the underwriter has no means of knowing the value ofthe goods except the statement ofthe assured. He has not, as in this case, all the information to his hand when he comes to insure goods; and it is much more easy to infer fraud from over-insurance ofgoods than from over-insurance ofships when both parties are in approximately the same position to know what the market value of the ship proposed to be insured is. Moreover, it must be borne in mind that underwriters who know their business very well and make large sums of money out ofit for the most part favour over-valuation of hull and machinery. They particularly favour it not only when they cover total loss and constructive total loss but particular average loss as well, because the 3 per cent franchise is harder to get over when the value is high than when the value is small. But there are good reasons why they should accept over-valuation in the case of total and constructive total loss, particularly where, as is always the case now, the insured value and the repaired value are to be taken at the same figure. But it is no business of mine to tell underwriters how to conduct business which they do very successfully. It suffices that they prefer over-valuation of hull and machinery.’ > Forbes v Aspinall (1811) 13 East 323; Williams v North China Insurance Co (1876) 1 CPD 757. On the effect of including advance freight in the value of the goods as set out in the valuation, see Thames and Mersey Marine Insurance Co v Pitts [1893] 1 QB 476. © Asfar & Co v Blundell [1895] 2 QB 196; on appeal [1896] 1 QB 123. 7 (1923) 15 LIL Rep 175, KBD. Another defence was that there had been a breach ofa warranty. As to this aspect of the case, see pp 289-290, post. ° For the evidence as to her value, see (1923) 15 LIL Rep 175 at 176. 10 Ibid, at 176. @ 96 The classification of policies In Papadimitriou v Henderson’ a policy in respect of freight and/or chartered freight and/or anticipated freight was effected for a period of 3 months as employment might offer. The sum insured was £3,500. Clause 5 of the Institute Time Clauses (Freight)'* was incorporated into the policy and stated: ‘In the event ofthe total loss, whether absolute or, constructive, the amount underwritten by this policy shall be paid in full.’ The vessel was chartered for a voyage from Odessa to Marseilles for the carriage of lorries and spare parts consigned to agents for the Spanish Republican Government. She was captured by an insurgent warship 160 miles east of Malta and taken to Palma, Majorca, and condemned as prize, and so was a constructive total loss.'* The assured claimed for a loss of freight under the terms of the policy set out above. Goddard J, held that the action succeeded, and that the full amount insured could be recovered even though there was evidence that the freight which would be earned under a later charter-party which had been fixed was a lesser sum. He observed:'* ‘The parties are saying, I think, by the policy, “I, the shipper, have a profit-earning ship, a ship with which I can earn profit, and I want to insure that if this ship is seized during the time the policy is current and effective, I shall recover a certain sum which is anticipated”— “anticipated freight” I think it means—“‘because it is anticipated that I shall be able to earn at least that sum, if not more, during the period.” As I say, it is certain that she could have earned £2,842 upon one voyage, not a very great distance from Marseilles round to Hamburg, and there would have been time, of course, after that voyage—I have not had any evidence as to the exact time that it would take or might be anticipated to take for a voyage from the South of France round to Hamburg, but it would not be very long, and thereafter the ship would have an opportunity of earning further freight. It seems to me to be well settled by the cases to which [Counsel] has referred me, that there can be no doubt as to the right to recover where a contract has been fixed and where the ship has started on a voyage in anticipation of a future voyage.’ His Lordship then went on to say that his attention had been called tos 67(1) of the Marine Insurance Act 1906 in relation to the measure of indemnity, and 4.15 said: ‘Now, the measure of indemnity here it seems to me is fixed in the same way as when you are insuring goods you fix them by valuation. It is fixed at £3,500. I think, therefore, that I am justified in holding that the plaintiff is entitled here to recover £3,500 of freight.’ Valuation and constructive total loss Section 27(4) of the Marine Insurance Act 1906 states: ‘Unless the policy otherwise provides, the value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss.’!® Thus, the valuation in the policy is not, apart from a term in the contract, "Tt (1939) 64 LIL Rep 345, KBD. ‘2 For the modern version ofthis clause, see clause 15 of the Institute Time Clauses (Freight) set out in Appendix III, p 553, post. '3 As to this aspect of the case, see pp 359-360, post. ‘4 (1939) 64 LIL Rep 345 at 350. 15 Tbid, at 351. *© As to constructive total loss, see pp 362-377, post. Valued and unvalued policies 97 conclusive for the purpose of determining whether a vessel is a constructive total loss, since for that purpose the repaired value must be considered.'’ But the valuation will be conclusive where there is a term to that effect.'® Thus, clause 17 of the Institute Time Clauses (Hulls) states: ‘In ascertaining whether the Vessel is a constructive total loss the insured value shall be taken as the repaired value... .’ Again, clause 15 of the Institute Time Clauses (Freight) states: *.... In ascertaining whether the Vessel is a constructive total loss, the insured value in the insurances on hull and machinery shall be taken as the repaired value... .’ Valuation and general average sacrifice Where there is a general average sacrifice, '? although the contributing value of the interests and the amount of the contribution are ascertained for the purposes of adjustment quite independently of the valuation in the policy, the insurer is only bound by the valuation in the policy. Where therefore the ship is valued in the policy at less than her value in the general average statement, the insurer is only liable to pay to her owner an amount which bears the same ratio to the ship’s contribution as the valuation in the policy bears to the valuation in the general average statement.”° Valuation and salvage charges The same rule’ applies to the insurer’s liability for salvage charges in like circumstances.” 2 Unvalued policies Unvalued policies are those in which the value of the thing would have to be ascertained in the event of a loss. Thus s 28 of the Marine Insurance Act 1906 states: ‘An unvalued policy is a policy which does not specify the value of the subject-matter insured, but, subject to the limit of the sum insured, leaves the insurable value to be subsequently ascertaimed in the manner hereinbefore specified.’ Unvalued policies are found only rarely.° Manner of ascertaining value The manner ofascertaining the insurable value is set out ins 16 of the Marine 17 Irving v Manning (1847) 1 HL Cas 287. 18 See eg Helmville Ltd v Yorkshire Insurance Co Ltd, The Medina Princess [1965] 1 Lloyd’s Rep 361, QBD (Com Ct); Marten v SS Owners’ Underwriting Assoctation Ltd (1902) 71 LJKB 718; Angel v Merchants’ Marine Insurance Co [1903] 1 KB 811, CA; North Atlantic SS Co v Burr (1904) 9 Com Cas 164; Hall v Hayman [1912] 2 KB 5. 19 As to general average sacrifice, see p 183, post. 20 §S Balmoral v Marten [1902] AC 511. ’ Ibid. 2 As to salvage charges, see pp 192-193, post. 3 For an example of an unvalued policy, see Berger and Light Diffusers Pty Ltd v Pollock [1973] 2 Lloyd’s Rep 442, QBD (Com Ct), which concerned some steel injection moulds. (See the judgment of Kerr J, ibid, at 459.) 98 The classification of policies Insurance Act 1906. This manner varies according as to whether the subject- matter insured is: i ii iii iv a ship; freight; goods; any other subject-matter. 2 Insurable value of ship Section 16 of the Marine Insurance Act 1906 states: ‘In insurance on ship the insurable value is the value at the commencement ofthe risk, of the ship, including her outfit, provisions and stores for the officers and crew, money advanced for seamen’s wages, and other disbursements (if any) incurred to make the ship fit for the voyage or adventure contemplated by the policy, plus the charges of insurance upon the whole: The insurable value, in the case of a steamship, includes also the machinery, boilers, and coals and engine stores if owned by the assured, and in the case ofaship engaged in a special trade, the ordinary fittings requisite for that trade.’ Thus, the value ofa ship insured under a voyage policy is that which she is worth at the port where the voyage commences, including all her stores and money advanced for seamen’s wages, the whole being covered by the premium and commission for effecting the insurance. This is the present method of valuation,* and was the view expressed by Stevens.* It was adopted by Lawrence J, in Shawe v Felton® and by Lord Ellenborough CJ, in Forbes v Aspinall.’ The value, however, on departure or arrival of the vessel will be, in fact, approximate to the true value at the date of the loss according as the loss takes place soon after departure orjust before arrival. But to take the value at the port where the voyage commences as the true estimate seems to place the assured in rather a favoured position, especially when he is entitled to insure his freight as well. Still, it has the advantage that the insurer, if he so desires, is able to ascertain with some certainty the actual value at the time, while the difficulties of ascertaining the value at any other time would be very great, if not insurmountable.® It is to be noticed that the more modern practice is to insure disbursements separately and not as part of the ship’s valuation. 12 Insurable value offreight Section 16 of the Marine Insurance Act 1906 states: ‘In insurance on freight, whether paid in advance or otherwise, the insurable value is the gross amount of freight at the risk of the assured, plus the charges of insurance.’ at ~©Insurable value of goods Section 16 of the Marine Insurance Act 1906 states: Cf Benecke, Principles of Indemnity, pp 40, 64. Stevens on Average, p 172. _ (1801) 2 East 109 at 116. (1811) 13 East 323 at 329. ori & nw See Herring v Janson (1895) 1 Com Cas 177. Valued and unvalued policies 99 ‘In insurance on goods or merchandise, the insurable value is the prime cost of the property insured, plus the expenses of and incidental to shipping and the charges of insurance upon the whole.’ Thus, the value of goods will be their value on board at the place of loading plus the insurance premium and commission.” The words ‘prime cost’ mean the prime cost to the assured at or about the time of shipment or at any rate when the prime cost could be reasonably deemed to represent their value to the owner at the date of shipment. Thus, in Williams v Atlantic Assurance Co'® Greer LJ, said:'} ‘In my opinion, s 16 of the Marine Insurance Act 1906 is to be construed in the light of the consideration that the object ofall insurance is indemnity: see especially per Lord Esher MR (then Brett LJ) and Bowen LJ, in Castellain v Preston.'? I think the words ‘‘prime cost” in that section mean the prime cost to the assured at or about the time of shipment, or at any rate at some time when the prime cost can be reasonably deemed to represent their value to their owner at the date of shipment. To hold that the prime cost at a period of boom long past must by statute be taken to be the value at a time when values had become diminished by 50 per cent would have the effect of enabling the assured to recover under his right to indemnity for loss during the voyage a sum which would represent a loss incurred long before the voyage started.’ Where the policy is unvalued, the assured is not entitled to claim for the estimated profit he would realise from the sale of the insured goods. '* tv Insurable value of any other subject-matter Section 16 of the Marine Insurance Act 1906 states: ‘In insurance on any other subject-matter the insurable value is the amount at the risk of the assured when the policy attaches plus the charges of insurance.’ Necessity for proof of value In Williams v Atlantic Assurance Co Ltd‘* an unvalued policy to the extent of £8,000 was effected in respect of 20 cases of textile goods for a voyage from Alexandria to Liverpool. The goods were lost on the voyage. The assignee of the policy claimed under it in respect of the loss, but the Court of Appeal’® held that the action failed because it was essential that the value of the lost goods should be proved and that this had not been done. Scrutton LJ, observed:'® ‘J am unable to make any finding in view ofthe innumerable frauds and contradictions which the plaintiff, himself innocent, put forward to support his assignor’s claim. If Constantinou ° Berger and Light Diffusers Pty Ltd v Pollock [1973] 2 Lloyd’s Rep 442, QBD (Com Ct), where the insurable value ofsome steel injection moulds was found to be £5,316.20. (See the judgment of Kerr J, ibid, at 456.) 10 [1932] All ER Rep 32. '! Thid, at 40. 12 [1881-5] All ER Rep 493 at 495, 499. 13 Usher v Noble (1810) 12 East 639, where Lord Ellenborough CJ, said (at 646): ‘The invoice price at the loading port, including premiums-of insurance and commission, is for all purposes of either total or average loss the usual standard of calculation resorted to for the purpose of ascertaining the value in the case of an open policy.’ 14 (1932) 43 LIL Rep 177, CA. 1S Scrutton, Greer and Slesser LJJ. 16 (1932) 43 LIL Rep 177 at 183. See also, the judgment of Slesser LJ, ibid, at 189. 100 The classification of policies and Valsamis were plaintiffs, I should unhesitatingly say they had not satisfied me of any amount of value. As it is, the first £1,000 recovered by Mr Williams, if he should recover anything, will go to Messrs Constantinou, Valsamis & Co. I have very carefully considered the evidence, and the plaintiff has not satisfied me of any value that I can reasonably place on whatever goods were contained in the 20 cases described in the manifest as ‘‘20 caisses manufacture’, which I am satisfied were shipped in the Parthian by Messrs Constantinou, Valsamis & Co.’ CHAPTER 11 The form of the policy A form of policy is set out in the Marine Insurance Act 1906. For nearly 200 years a form was adopted by Lloyd’s and the insurance companies and continued in use despite considerable criticism. In 1982 a new form came into use. A THE FORM ACT 1906 SET OUT IN THE MARINE INSURANCE There are no restrictions as to the form which a marine insurance policy may take. All that s 30(1) of the Marine Insurance Act 1906 states is: ‘A policy may be in the form in the First Schedule to this Act.’ The form set out in the First Schedule is as follows: Form oF Poticy. BE IT KNOWN THAT as well in own name as for and in the name and names ofall and every other person or persons to whom the same doth, may, or shall appertain, in part or in all doth make assurance and cause and them, and every of them, to be insured lost or not lost, at and from Upon any kind of goods and merchandises, and also upon the body, tackle, apparel, ordnance, munition, artillery, boat, and other furniture, of and in the good ship or vessel called the whereof is master under God, for this present voyage, or whosoever else shall go for master in the said ship, or by whatsoever other name or names the said ship, or the master thereof, is or shall be named or called; beginning the adventure upon the said goods and merchandises from the loading thereof aboard the said ship, upon the said ship, etc and so shall continue and endure, during her abode there, upon the said ship, etc. And further, until the said ship, with all her ordnance, tackle, apparel, etc, and goods and merchandises whatsoever shall be arrived at upon the said ship, etc, until she hath moored at anchor twenty-four hours in good safety; and upon the goods and merchandises, until the same be there discharged and safely landed. And it shall be lawful for the said ship, etc, in this voyage, to proceed and sail to and touch and stay at any ports or places whatsoever without prejudice to this insurance. The said ship, etc, goods and merchandises, etc, for so much as concerns the assured by agreement between the assured and assurers in this policy, are and shall be valued at Touching the adventures and perils which we the assurers are contented to bear and do take upon us in this voyage: they are of the seas, men ofwar, fire, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, surprisals, takings at sea, arrests, restraints, and detainments of all kings, princes, and people, of what nation, condition, or quality soever, barratry of the master and mariners, and ofall other perils, losses, and misfortunes, that have or shall come to the hurt, detriment, or damage of the said goods and merchandises, and ship, etc, or any part thereof. And in case of any loss or misfortune it shall be lawful to the 101 102. The form of the policy assured, their factors, servants and assigns, to sue, labour, and travel for, in and about the defence, safeguards, and recovery of the said goods and merchandises, and ship, etc, or any part thereof, without prejudice to this insurance; to the charges whereof we, the assurers, will contribute each one according to the rate and quantity of his sum herein assured. And it is especially declared and agreed that no acts of the insurer or insured in recovering, saving, or preserving the property insured shall be considered as a waiver, or acceptance of abandonment. And it is agreed by us, the insurers, that this writing or policy of assurance shall be of as much force and effect as the surest, writing or policy of assurance heretofore made in Lombard Street, or in the Royal Exchange, or elsewhere in London. And so we, the assurers, are contented, and do hereby promise and bind ourselves, each one for his own part, our heirs, executors, and goods to the assured, their executors, administrators, and assigns, for the true performance ofthe premises, confessing ourselves paid the consideration due unto us for this assurance by the assured, at and after the rate of In Witness whereof we, the assurers, have subscribed our names London. and sums assured in NB—Corn, fish, salt, fruit, flour, and seed are warranted free from average, unless general, or the ship be stranded—sugar, tobacco, hemp, flax, hides and skins are warranted free from average, under five pounds per cent, and all other goods, also the ship and freight, are warranted free from average, under three pounds per cent unless general, or the ship be stranded. B THE FORM USED UP TO 1982 Lloyd’s developed their own form of policy, but the wording of a marine insurance company’s policy was substantially the same. The form of the Lloyd’s policy, which had been in use for about 200 years, was still employed to cover all kinds of marine risks, any variations which the newer developments of commerce necessitated being made by means of clauses which were incorporated with the policy in various ways. Sometimes clauses were printed on slips and gummed to the policy, or they were written, printed, or stamped on the margin of the policy. In other cases, variations were incorporated by reference to some other document, eg when it was intended that the policy should embody the rules of an association or protection club, or any other rules recognised in the shipping world, such as the York—Antwerp Rules 1974.’ The result was that, instead of having a policy expressly drawn to meet the special risks, the old form was packed with clauses and exceptions, and became a document of some complexity, the construction of which was often a matter of great difficulty. The contract thus formed was often the subject of adverse judicial comment. Indeed, the judicial view of marine policies would seem to be well summarised in the words ofBullerJ,which form a criticism as applicable today as when they were uttered in Brough v Whitmore? in 1791: ‘Without commenting on the words ofthe policy, it is sufficient to say that a policy of assurance has at all times been considered in courts of law as an absurd and incoherent instrument.’ ' The York—Antwerp Rules 1974 are set out in Appendix IV, pp 563-567, post. ? [1791] 4 Term Rep 206 at 210. See also, Stmond vBoydell (1779) 1 Doug KB 268 at 270 (per Lord Mansfield CJ); Stewart v Merchants’ Marine Insurance Co (1885) 16 QBD 619 at 621 (per Lord Esher MR); Hydarnes SS Co v Indemnity Mutual Marine Assurance Co [1895] 1 QB 500; The Glenlivet [1894] P 48 at 53 (per Lindley LJ); Cunard SS Co v Marten [1902] 2 KB 624 at 626 (per Walton J); Western Assurance Co of Toronto v Poole [1903] 1 KB 376 at 388 (per Bigham J);Baring Bros @ Co v Marine Insurance Co (1894) 10 TLR 276; Nottebohn v Richter (1886) 18 QBD 63. The form used up to 1982 103 In Marten v Vestey Bros Ltd* Lord Dunedin referred to the Lloyd’s policy in the following words:* “The form known as ‘‘Lloyd’s Policy” is a very ancient document. It undoubtedly owed its original form to the time, now long past, when the ordinary state of affairs was that the shipowner and the merchant were one and the same person. Like Antonio in “The Merchant of Venice”, he sent out his argosy laden with his own goods to be disposed of in foreign lands and to bring back foreign goods in exchange. The oldest policy known in England is of date 1613, a copy of it being preserved in the Bodleian Library at Oxford, and differs little from the policy of the present day; but the actual printed form of policy which we now have was arranged in 1779 at a general meeting of members of Lloyd’s, who undertook to establish a particular form of marine insurance policy and not to allow any alterations in that policy. With the exception of the introduction in 1874 of what is known as the “Waiver Clause”, and the alteration in 1850 of the phrase at the commencement ofthe policy, “In the name of God, Amen”, to ‘‘Be it known that”, the printed policy at present is the policy of 1779.’ He then went on to consider the practice of making additions to the form, and said:> ‘Now, undoubtedly it might have been better—it would have saved this and, perhaps, other controversies—if, when modern times had come, the underwriters had reformed this document and adopted a separate form for insurance on ship, goods and freight respectively when the insurance was only to cover one ofthese three things. But they have not done so. Nay, more, they have not in practice even taken the trouble, when a policy is effected on one, to delete the phrases obviously only applying to the other two things which may be insured. But they leave blanks in the policy, and these blanks are filled up so as to fix what is the subject insured, and additional and special clauses are often written on the margin or affixed to the policy by gum. This may be a bad practice, but it is a universal practice.’ In Kulukundis v Norwich Union Fire Insurance Society® Scott LJ, said:’ ‘The archaic words ofour ancient form of marine policy, set out in the schedule to the Act and embodied in the policy sued upon, afford little guidance in the way of description or explanation as to the circumstances which the insurer agrees shall constitute a loss for which he has to pay. Indeed the statutory form is inapt to cover freight at all, although it is habitually used by Lloyd’s for insurance offreight by adding written or typed words to the printed form, regardless of grammar, so as to bring in that subject-matter.’ In Atlantic Maritime Co Incorporated v Gibbon® Sir Raymond Evershed MR, said:? ‘The policy is in a form which, I gather, is common in cases ofthis kind; that is to say, it is based upon the standard form of Lloyd’s policy to which numerous slips, ten in all, have been added, 3 - [1920] All ER Rep 603, HL. Ibid, at 606. Ibid, at 606. [1937] 1 KB 1, [1936] 2 All ER 242, CA. Ibid, at 270. [1953] 2 Lloyd’s Rep 294, CA. Ibid, at 299. See also, the judgment ofSellersJ,in the court below: [1953] 1 Lloyd’s Rep 278 at 285, where he said that freight insurance entered into on the old form ofpolicy with deletions and additions to adapt it to the intended contract had almost invariably given rise to difficulties ofinterpretation, and he did not regard the present case as one ofthe exceptions. See further, Amin Rasheed Shipping Corpn v Kuwait Insurance Co, The Al Wahab [1983] 2 Lloyd’s Rep 365 at 370, HL, where Lord Diplock said that the adoption of the obsolete language of the Lloyd’s policy made it impossible to discover what were the legal incidents of the mutual rights and obligations accepted by the insurers and the assured as having been brought into existence by the contract, unless recourse was had not only to the Rules for Construction of the Policy contained in the Schedule to the Marine Insurance Act 1906 but also to the substantive provisions of the Act. For the Rules for Construction of the Policy, see p 330, post. 104 The form of the policy so that little indeed is left of the original foundation. . . . |have no doubt that those engaged in this class of business find it convenient that their policies should take this form. But it cannot, I think, be denied that the effect produced is in some degree one oftaking away with one hand what has been given with the other, and the task of the courts in construing the resultant document or documents is certainly rendered more difficult. The very numerous cases to which we have been referred make it not, indeed, easy to contend that those entering into this class of business well understand the conventional accumulation of clauses which constitute the policy.’ 6 An echo of this sentiment is to be found in the American case of Calmar SS Corpn v Scott, The Portmar,'® where FrankfurterJ,said that the policy had been assembled by imposing on the age-old Lloyd’s form layer upon layer of warranties and riders. Warranties freed the underwriters from obligation imposed by riders, and subsequently riders then reimposed obligations thus avoided. Construing such conglomerate provisions required a skill not unlike that called for in the decipherment of obscure palimpsest texts. CG THE NEW FORM In January 1982 Lloyd’s and the marine insurance companies issued new forms of policies."? The forms contain a statement that in consideration of the payment of the premium the insurers agree to insure the subject-matter against loss, damage, liability or expense in the proportions and manner provided. Then follows a schedule stating (i) the policy number; (ii) the name of the assured;’? (iii) the name of the vessel; (iv) the voyage or period of insurance; (v) the subjectmatter insured; (vi) the agreed value (if any); (vii) the amount insured; (viii) the premium; and (ix) clauses, endorsements, special clauses and warranties. '* As from | January 1982 new Institute’* Clauses for use with the new forms have been issued. In general, these set out (a) the risks covered; (b) the exceptions; (c) the duration of the policy; (d) the circumstances in which a claim can be made; (e) the assured’s duty to minimize losses; and (f) the fact that English law and practice are to apply. The more important of these clauses are: The Institute Cargo Clauses (A).’> The Institute Cargo Clauses (B).'° The Institute Cargo Clauses (C).1” The Institute War Clauses (Cargo).*® CF Oe Ne The Institute Strikes Clauses (Cargo).*? '© [1953] 1 Lloyd’s Rep 485 at 488. 'T See Appendix II, pp 510-515, post. ied 13 15 *® ‘” '8 "9 The Marine Insurance Act 1906, s 23 states: ‘A marine policy must specify (1) the name ofthe assured, or of some person who effects the insurance on his behalf . . .’ As to warranties, see pp 280-314, post. Ie the Institute of London Underwriters. The clauses are revised from time to time to meet the changing needs of the marine insurance world. See Appendix III, pp 516-519, post. See Appendix III, pp 519-522, post. See Appendix III, pp 523-526, post. , See Appendix III, pp 526-529, post. See Appendix III, pp 530-532, post. The new form 6 7 8 9 10 11 12 13. The The The The The The The The Institute Institute Institute Institute Institute Institute Institute Institute 105 Time Clauses (Hulls).”° Voyage Clauses (Hulls).’ War and Strikes Clauses (Hulls-Time).? War and Strikes Clauses (Hulls-Voyage).? Time Clauses (Freight).* Voyage Clauses (Freight).° War and Strikes Clauses (Freight-Time).° War and Strikes Clauses (Voyage—Freight).’ Section 24 of the Marine Insurance Act 1906 states: ‘A marine policy must be signed by or on behalf of the insurer, provided that in the case of a corporation the corporate seal may be sufficient, but nothing in this section shall be construed as requiring the subscription of a corporation to be under seal.’® At one time the assured’s broker obtained the underwriters’ signatures to a Lloyd’s policy, but now they are affixed by Lloyd’s Policy Signing Office. Strictly speaking each underwriter should sign for himself but where as is usually the case, the underwriters work in syndicates, one person signs as their agent. 9 Section 67(2) of the Marine Insurance Act 1906 states: ‘Where there is a loss recoverable under the policy, the insurer, or each insurer if there be more than one, is liable for such proportion of the measure of indemnity as the amount of his subscription bears to the value fixed by the policy, in the case ofa valued policy, '° or to the insurable value in the case of an unvalued policy.’!! 20 See Appendix See Appendix See Appendix See Appendix See Appendix III, pp 533-540, III, pp 540-547, III, pp 547-548, III, pp 549-350, III, pp 550-554, post. post. post. post. post. See Appendix III, pp 555-558, post. See Appendix III, pp 558-559, post. See Appendix III, pp 560-561, post. Where the insurer is a partnership, the name of the firm is sufficient: Reid v Allan (1849) 4 Exch 326. But nowadays partnerships between underwriters are forbidden by usage. As to syndicates, see Ivamy, General Principles of Insurance Law (4th edn, 1979), p 597. 10 As to valued policies, see pp 93-97, ante. &F ADAwnW @orA CO SK WN © 1! As to unvalued policies, see pp 97-100, ante. CHAPTER 12 Designation of the subject-matter in the policy The subject-matter insured must be stated in the policy with reasonable certainty, but the nature and extent of the assured’s interest in the subjectmatter need not be specified. If the subject-matter insured is designated in general terms, the policy is construed to apply to the interest intended by the assured to be covered. A THE NEED FOR REASONABLE CERTAINTY Section 26(1) of the Marine Insurance Act 1906 states: ‘The subject-matter insured must be designated in a marine policy with reasonable certainty.’ Section 26(4) provides: ‘In the application ofthis section regard shall be had to any usage regulating the designation of the subject-matter insured.’ 1 Usage By usage it is understood that when the ‘subject-matter insured’ consists of goods, not only are the goods themselves insured but so is the adventure.’ Thus, Earl Loreburn said:? ‘There are many things that may be at risk, and in respect of which insurance may be effected—ship, goods, freight, profits, and so on. There are also familiar even antique, expressions constantly used from long ago in marine policies, and continued because they are well understood in the business, or have been interpreted by Judges. This section says that regard is to be had to any usage regulating the designation of the subject-matter assured. The words ofthis policy have for generations been understood and held by Judges to designate not merely the goods but also the adventure. So far from abrogating this designation of subjectmatter I should have thought the Act took pains to preserve it and others like it. I will merely in a sentence refer to s 91(2) of the Act which preserves the rules of the Common Law, including the law merchant, save in so far as they are inconsistent with the express provisions of this Act. It seems to me that Parliament has triply guarded against the danger that the Act should be construed in the sense urged upon us by Counsel for the [insurers]. It has refrained from saying that the old rule shall be altered, which of itself would suffice. It has twice warned us that we are to regard and preserve rules and usages in terms that are applicable to this rule. Accordingly, I take with me the conclusion that the adventure was a subject-matter insured.’ * British and Foreign Marine Insurance Co Ltd v Samuel Sanday & Co [1916-17] All ER Rep 134, HL. 2 Ibid, at 137. 106 The need for reasonable certainty 2 107 Describing subject-matter briefly The subject-matter insured is often merely referred to briefly, eg ‘freight’, ‘ship’, ‘goods’. t . ‘Freight’ Rule 16 of the Rules for Construction of Policy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘The term “‘freight”’ includes the profit derivable by a shipowner from the employment ofhis ship to carry his own goods or moveables,* as well as freight payable by a third party, but does not include passage money.”* Advance freight may be insured under the simple designation of ‘freight’, and need not be described as ‘advance’.* ii ‘Ship’ Rule 15 of the Rules for Construction of Policy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘The term “ship” includes the hull, materials and outfit, stores and provisions for the officers and crew, and, in the case of vessels engaged in a special trade, the ordinary fittings requisite for the trade, and also, in the case of asteamship, the machinery, boilers, and coals and engine stores, if owned by the assured.’ The word ‘hull’ in a policy on ‘hull and machinery’ does not cover coal, engine room and deck stores, provisions and cabin stores, port expenses and advances or premiums. wt © ‘Goods? Rule 17 of the Rules for Construction of Policy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘The term “goods’ means goods in the nature of merchandise, and does not include personal effects’ or provisions and stores for use on board. In the absence of any usage to the contrary, deck cargo and living animals must be insured specifically, and not under the general denomination of goods.’ The words ‘in the absence of any usage to the contrary’ mean a usage in the trade and not a usage of the business of insurance.® Thus, in British and Foreign Marine Insurance Co v Gaunt,? where part of a cargo of wool, which had been insured from South America to England, had been carried on deck on a local steamer to the port of shipment for loading on to an 3 ‘Moveables’ means ‘any moveable tangible property other than the ship and includes money, valuable securities, and other documents’: Marine Insurance Act 1906, s 90. 4 The term ‘freight’ is also defined in similar terms in the Marine Insurance Act 1906, s 90. > Hall v Janson (1855) 4 E&B 500, in which case, however, the interest was described as ‘money advanced on account of freight’. © Roddick v Indemnity Mutual Marine Insurance Co [1895] 2 QB 380, CA. ’ Personal belongings may be insured as ‘effects’: Duff v Mackenzie (1857) 3 CBNS 16. 8 British and Foreign Marine Insurance Co Ltd v Gaunt [1921] 2 AC 41, HL. 9 [1921] All ER Rep 447, HL. The case also concerned the burden ofproving a loss under an ‘all risks’ policy. As to this point, see p 178, post. 108 Designation of the subject-matter in the policy ocean steamer, the insurers repudiated in respect of this part on the ground that it ought to have been insured specifically. The House of Lords’® rejected this contention, and held that there was a usage in the trade to carry deck cargo, and that the insurance company was liable even if it did not know of the usage. Lord Birkenhead LC, said:*! ‘It was contended for the [insurers] that theasc “‘usage”’ contemplated by the rule was a usage in the insurance business as to the description for the purposes of insurance. This cannot be so. In the first place this construction would involve such a departure from the principles of law existing when the Act was passed that we ought not so to construe the words unless such an alteration was most plainly intended; secondly, inasmuch as an insurer is bound to know the usages of trade, ifa usage exists in the trade to carry goods of a particular kind on deck, he knows that such goods are likely to be so carried, and there is little reason for requiring a specific statement that such a method of carriage will or may be employed. The “‘usage”’, therefore, must be a trade usage, and it was abundantly established in the case which your Lordships are considering. There was, therefore, no need to insure the wool specifically as deck cargo, and the omission to do so does not afford any defence to the [insurers].’ The term ‘goods’ will cover substituted cargoes where the policy is ‘out and home’, or when it insured voyages to successive ports, or is a time policy.’? It will also cover the produce of a fishing expedition,'? the interest of a carrier,'* and the outfit of an emigrant.'® But it will not cover jewellery worn on the person’® nor profits.'’ Accordingly, if profits are to be insured, they should be specifically described as such in the policy.*® Bottomry and respondentia are not covered by the term ‘goods’, and should be specifically described in the policy, unless a usage can be proved in any particular trade under which it is usual to insure such interests under general words. ' ‘Cotton in bales’ will coves ‘pressed bales’, if that is the meaning of the term in the particular trade.” In Overseas Commodities Ltd v Style’ some cases of tinned pork were insured under an “all risks’ policy under which each case had to be marked ‘L26 NMS’. Some of the cases were not so marked, and it was held that the policy attached only to such of the cases that complied with this requirement, and the insurer was under no liability in respect of the loss of any cases not so marked. Lord Birkenhead LC, Viscount Finlay, Viscount Cave, Lord Atkinson and Lord Sumner. [1921] All ER Rep 447 at 450. See also the speech ofViscount Finlay, ibid, at 453-454, and that of Lord Sumner, ibid, at 455-458. ‘2 Hill v Patten (1807) 8 East 373. '3 Thid. ; ‘4 Crowley v Cohen (1832) 3 B&Ad 478. *> Wilkinson v Hyde (1858) 3 CBNS 30. *© Brown v Stapyleton (1827) 4 Bing 119. ‘7 Inglis v Stock (1885) 10 App Cas 263. Royal Exchange Assurance Corpn v.M’ Swiney (1850) 14 QB 646; Inglis v Stock supra; Halhead v Young (1856) 6 E&B 312; Crowley v Cohen, supra; Mackenzie v Whitworth (1875) 1 ExD 36. Glover v Black (1763) 3 Burr 1394; Simonds v Hodgson (1832) 3 B& Ad 50. ° nae uv Briggs (1827) 2 C&P 525. * [1958] 1 Lloyd’s Rep 546, QBD (Com Ct). N The need for reasonable certainty 3 109 Error in description A clause? may state: “Held covered at a premium to be arranged in case of ... any omission or error in the description of the interest, vessel or voyage.’ The clause may refer to a ‘note’ in the policy stating: ‘It is necessary for the Assured when they become aware of an event which is held covered under this insurance to give prompt notice to Underwriters and the right to such cover is dependent upon compliance with this obligation.’ Premium to be arranged The word ‘arranged’ means ‘agreed or, in default of agreement, fixed by an arbitrator or by the court.’ The clause does not contemplate any alteration in the terms of the insurance other than in respect of premium.* The clause applies only if the assured on the basis of an accurate declaration of all the facts affecting the risk but excluding knowledge of what was to happen in the event, could have obtained a quotation in the market at a premium which could properly be described as a ‘reasonable commercial rate’.° Thus, in Liberian Insurance Agency Inc v Mosse® evidence was given to the effect that no insurer, knowing that the insured consignment of enamelware was an end of production consignment containing a variety of qualities including a high proportion of seconds and that a significant proportion of the cargo was packed in export cartons, would have quoted a reasonable commercial rate of premium on all risks terms, unless he was protected by a fpa warranty.’ Good faith The ‘held covered’ clause has no application when the omission or error in the description was intended to deceive.® Interest The word ‘interest’ in the ‘held covered’ clause means ‘subject-matter insured’ as was held in Hewitt Bros v Wilson,? where four cases of printing machinery were insured for a voyage from London to Malta. A portion of the machinery was damaged by breakage during the voyage, and the assured claimed an indemnity in respect of it. The policy contained a clause stating: N As in clause 4 of the Institute Cargo Clauses (FPA) which are now replaced by the Institute Cargo Clauses (A) set out in Appendix III, pp 516-519, post. The new Clauses, however, do not contain a ‘held covered’ clause in case of any omission or error in the description of the w interest. ; Liberian Insurance Agency Inc v Mosse [1977] 2 Lloyd’s Rep 560, QBD (Com Ct), at 568 (per Donaldson J). Ibid, at 568 (per Donaldson J). Ibid, at 567 (per Donaldson J). [1977] 2 Lloyd’s Rep 560, QBD (Com Ct). As to the fpa warranty, see pp 429-432, post. Liberian Insurance Agency Inc v Mosse [1977] 2 Lloyd’s Rep 560 at 567 (per Donaldson J); Hewitt Bros v Wilson [1915] 2 KB 739, CA. ° (1915) 113 LT 304, CA. KDW oI * 110 Designation of the subject-matter in the policy ‘In the event of .. . any incorrect definition of the interest insured, it is agreed to hold the assured covered at a premium (if any) to be arranged.’ The insurers contended that the words ‘interest insured’ meant ‘insurable interest’. But the Court of Appeal!” held that this was not their true meaning. Lord Reading LCJ, said:’ ‘I have looked through the statute and have asked if Counsel could point to anything in it which shows that the use ofthe phrase “interest insured”’ is applicable to the insurable interest. The words “‘interest insured” can, to my mind, be explained as a useful phrase to indicate that it is the subject-matter insured in which the person insuring has an interest in the goods themselves. I have no hesitation in coming to the conclusion that that is the true meaning of the words used.’ Swinfen Eady LJ, observed:'? ‘I can see no reason for upholding the contention that the words “‘interest insured” in the “held covered clause” relate to the insurable interest which the assured had in the goods insured under the policy. It is not necessary more particularly to describe or deal with the insurable interest under the policy. It is not necessary that the assured should have an insurable interest in the subject-matter of the insurance at the time when the insurance is effected. (See Marine Insurance Act 1906, s 6(1)). In my opinion the words “interest insured”’ do not refer to insurable interest, but only to the subject-matter of the insurance, so that the words ‘“‘any incorrect definition ofthe interest insured” mean, therefore, ‘‘any incorrect definition of the subject-matter of the insurance’’.’ Bray J, said:*? ‘It is said that the words “‘interest insured”’ mean “‘insurable interest”’ in the subject-matter of the insurance, and not the subject-matter itself. I agree that we ought to apply the ordinary principles of construction to the words. Under the Marine Insurance Act 1906, and under the ordinary law merchant, it is not necessary to define the interest of the assured at all. Therefore the words “definition ofinterest”’ (if “‘interest”’ is to be taken as meaning insurable interest) do not describe anything that is usually to be found in policies of insurance. But I can see no reason for giving to these words any such meaning. The term is a good one to use in order to describe the subject-matter of the insurance, and I can see no reason why any artificial meaning should be attributed to it, more especially when it is remembered that in this same policy there is another clause in which the word “interest” is clearly used to mean the subject- matter of the insurance.’ Effect of the ‘note’ In Liberian Insurance Agency Inc v Mosse’* Donaldson J, said’> that, as he had indicated in argument, he entertained some doubt as to whether the ‘note’, which was not a numbered clause, was to be construed as having contractual effect. But he was satisfied that the ‘note’ accurately stated the law, whether or not it was contractual. ‘© Lord Reading LOJ, Swinfen Eady LJ and BrayJ. 1! (1915) 113 LT 304 at 306. 2° ‘3 ‘4 "® Ibid, at 307. Thid, at 307. [1977] 2 Lloyd’s Rep 560, QBD (Com Ct). Ibid, at 566. See also Hood v West End Motor Car Packing Co Ltd [1917] 2 KB 38, CA; Thames and Mersey Marine Insurance Co Ltd v H T Van Laun & Co [1917] 2 KB 48, HL. The need for reasonable certainty 111 ‘Prompt notice’ In Liberian Insurance Agency Inc v Mosse'® his Lordship said‘’ that if the assured was to take advantage of the ‘held covered’ clause, he must give notice’® to the insurers expressly or impliedly seeking a cover in accordance with the clause within a reasonable time of learning of the change of voyage or of the omission or error in the description. What time was reasonable would depend on all the circumstances. Thus, if the assured learnt the true facts while the risk was still current, a reasonable time would usually be a shorter period than when that occurred when the adventure had already ended. If the assured learnt the true facts when it was in the grip of a peril, a reasonable time would be very short indeed. His Lordship went on to say'® that it might be objected that it was unfortunate to use the words ‘prompt notice’ when what was meant was notice within a reasonable time. But in the context of a clause which might impose on insurers, and indirectly on reinsurers, risks which they had never specifically accepted, he did not think that notice which was other than prompt could ever be said to be given within a reasonable time. The use of the word ‘prompt’ was not only justifiable but also desirable in explanation of the obligation which was implicit in the clause itself. B NATURE AND EXTENT OF THE INTEREST Section 26(2) of the Marine Insurance Act 1906 states: ‘The nature and extent ofthe interest of the assured in the subject-matter insured need not be specified in the policy.’ Thus, it is not necessary for the policy to state the particular way in which the assured is interested in the subject-matter insured, eg as owner, trustee, mortgagor or mortgagee. It is sufficient if that thing is insured out of which his particular interest springs.”° Similarly, the policy need not specify that the insurer is reinsuring. Thus, if he has insured on goods, it is sufficient if the reinsurance policy merely states that it is ‘on goods’.’ But it is the usual practice for a reinsurance policy to contain a clause stating: ‘Being a reinsurance subject to the same clauses and conditions as the original policy and to pay as may be paid thereon.’ C INTEREST INTENDED TO BE COVERED Section 26(3) of the Marine Insurance Act 1906 states: © [1977] 2 Lloyd’s Rep 560, QBD (Com Ct). ‘7 Tbid, at 566. 18 In Liberian Insurance Agency Inc v Mosse, supra, the assured did not put the full facts before the insurers and did not seek the protection of the clause. All that happened was that the fact that part of the consignment was in cartons instead ofinwooden cases was revealed incidentally in the course ofa survey report. (See the judgment of Donaldson J, ibid, at 568.) 19 Ibid, at 566. 20 ° Irving v Richardson (1831) 2 B& Ad 193: Carruthers v Sheddon (1815) 6 Taunt 14. 1 Mackenzie v Whitworth (1875) 1 ExD 36; Craufurd v Hunter (1798) 8 Term Craufurd (1806) 2 Bos& PNR 269. Rep 13; Lucena v 112 Designation of the subject-matter in the policy ‘Where the policy designates the subject-matter insured in general terms, it shall be construed to apply to the interest intended by the assured to be covered.’ The word ‘interest’ in the Marine Insurance Act 1906, s 26(3), means the interest which the assured has in the subject-matter of the insurance. j Thus, Bailhache J, said:* ‘Subsection (3) has been the subject ofa good deal of judicial criticism on the ground that it is dithieult to understand. I think the chief difficulty about it is due to the fact that the word “interest” is very often used in marine insurance in two senses. It is very often used to mean the nature of the interest which the assured has in the subject-matter of the insurance, and it is also often used in the looser sense to indicate the subject-matter of the insurance itself. When, however, the same section of an Act of Parliament contains the word “‘subject-matter” and the word “‘interest”’ used together, it seems to me quite clear that the word “interest”? must be construed in its stricter and proper sense. I think that sub-s (3) means that where the policy designates the subject-matter insured in general terms, as, for instance, in this case, merchandise, it shall be construed to apply to the interest—that is to say, the pecuniary or insurable interest which the assured intended should be covered, whether that interest be that of the owner or whether it be that of aperson who has made advances, or of aperson who is interested in the safe arrival of the goods by reason of the commission which he shall get on the sale, and, of course, the policy applies to a case where a person takes out a floating policy not to cover any pecuniary interest of his own, but to cover the liabilities and interest of persons on whose behalf he is instructed to insure.’ —_—-S ? Dunlop Bros & Co v Townend [1918-19] All ER Rep 575. 3 Tbid, at 578. CHAPTER 13 Attachment and duration of the risk under the policy The attachment and duration ofthe risk, ie the period during which the insurer is liable for any loss or damage which may be suffered by the subject-matter insured will depend on whether the policy is a time policy or a voyage policy. A TIME POLICIES The attachment and duration of the risk under the policy will depend on its terms. Thus, for example, a vessel may be insured ‘From 12 noon | January 1986 to 12 noon on | January 1987. Under a policy in this form the risk will normally terminate on | January 1987 at 12 noon, but policies often contain a ‘continuation clause’. An example is provided by clause 2 of the Institute Time Clauses (Hulls) which states: ‘Should the Vessel at the expiration ofthis Policy be at sea or in distress or at a port of refuge or of call, she shall, provided previous notice be given to the Underwriters, be held covered at a pro rata monthly premium to her port of destination.’ At one time no policy could be made for a period exceeding 12 months,” but now there are no such restrictions.? The hour of the day on which the risk is to commence and terminate is almost invariably expressed in all English time policies, and, subject to the Summer Time Act 1972, s 3, the time referred to, unless it is otherwise specifically stated, is Greenwich mean time.* Sometimes the policy attaches on the happening of specified event. Thus, in Rosa v Insurance Co of the State of Pennsylvania: The Belle of Portugal,’ cargo was insured under a policy which stated: ‘Insurance to attach when vessel advise Carl and Carl Insurance, Inc of the amount offish on board. Vessel is permitted to report at various times throughout the voyage. No insurance to i N These clauses are set out in Appendix III, pp 533-540, post. Stamp Act 1891, s 93. But s 11(1) of the Finance Act 1901 rendered valid a policy containing a continuation clause as defined bys 11(3) ofthat Act. Viz “The expression ‘‘continuation clause”’ means an agreement to the following or the like effect, namely, that in the event ofthe ship being at sea or the voyage not otherwise completed on the expiration of the policy, the subject-matter of the insurance shall be held covered until the arrival of the ship or for a reasonable time thereafter not exceeding thirty days.’ Finance Act 1959, Eighth Schedule, Part II which repealed, inter alia, s 93 of the Stamp Act 1891, and s 11 of the Finance Act 1901. Interpretation Act 1978, ss 9, 23(3). n [1970] 2 Lloyd’s Rep 386, US Ct of Appeals, Ninth Circuit, where it was held that the failure to report the amount of fish on board was caused by heavy rain which curtailed the sending w capacity of the vessel’s radio, and was therefore excused by the clause set out above. 113 114 Attachment and duration of the risk under the policy attach hereunder unless message is received and confirmed in San Diego that the vessel had taken on a load of not less than one-fourth of her loading carrying capacity. This policy shall not be prejudiced by any unintentional delay or omission in the reporting hereunder.’ The policy may contain a ‘termination clause’, as in clause 4 of the Institute Time Clauses (Hulls)® providing for its automatic termination, e g in the case of * i change of the classification society of the vessel; ii change of the vessel’s class;’ ili change in the ownership of the vessel; iv change in the flag of the vessel; v_ transfer of the vessel to new management; vi charter on a bareboat basis; vii requisition for title or use of the vessel.® Clause 5 of the Institute Time Clauses (Freight) is similar to effect.® Further, clause 5 of the Institute War and Strikes (Hulls-Time)® and clause 5 of the Institute War and Strikes (Hulls-Voyage)'® state that the insurance may be cancelled by either party on giving 7 days’ notice, and that whether or not such notice has been given, the insurance terminates automatically: i on the occurrence of any hostile detonation of any nuclear weapon of war; ii iii on the outbreak of war (whether there is a declaration of war or not) between any of the following countries: United Kingdom, United States of America, France, the Union of Soviet Socialist Republics, the People’s Republic of China; in the event of the vessel being requisitioned for title or use. B VOYAGE POLICIES A Attachment of the risk For purposes of convenience voyage policies may be considered under the following heads: 1 Voyage policies on ship. 2 Voyage policies on goods. 3. Voyage policies on freight. ° These clauses are set out in Appendix III, pp 533-540, post. ’ For a case where a vessel’s class was held not to have been altered, see Prudent Tankers Ltd SA v Dominion Insurance Co Ltd, The Caribbean Sea [1980] 1 Lloyd’s Rep 338. QBD (Com Ct). (See the judgment of Robert GoffJ, ibid, at 349.) 8 These clauses are set out in Appendix III, pp 550-554, post. ? These clauses are set out in Appendix III, pp 547-548, post. ‘© These clauses are set out in Appendix III, pp 549-550, post. Voyage policies 1 115 Voyage policies on ship The attachment of the risk will depend on whether the voyage is described as ‘from’ a port or ‘at and from’ a port. Further, the risk will never attach at all if the vessel does not sail from the port of departure stated in the policy or sails for a different destination. ‘From’ Where the voyage is described in the policy as, eg ‘from London to Montreal’, the word ‘from’ only covers the risk after the vessel sails from London. Rule 2 of the Rules for Construction ofPolicy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘Where the subject-matter is insured from a particular place, the risk does not attach until the ship starts on the voyage insured.’ “At and from’ The words ‘at and from’ will protect the ship in the named port if she is there in good safety:'’ but she must have been at the port in good safety, otherwise the risk will not attach’? except where the insurance is effected ‘lost or not lost’. Rule 3(a) of the Rules for Construction ofPolicy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘Where a ship is insured at and from a particular place, and she is at that place in good safety when the contract is concluded, the risk attaches immediately.’ It is not, however, necessary that a ship so insured should be at the place where the adventure commences when the contract is concluded. Thus, Rule 3(b) of the Rules for Construction of Policy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘If she be not at that place when the contract is concluded, the risk attaches as soon as she arrives there in good safety, and, unless the policy otherwise provides, it is immaterial that she is covered by another policy from a specified time after arrival.’ Ifin an insurance ‘at and from’ a vessel arrives at the port named as that at which the risk is to commence in such a condition as to be incapable of lying there in safety until she can be repaired for her voyage, the risk will not attach.'? But ‘good safety’ means ‘good physical safety’ only. Accordingly, in Bell v Bell,'* where a ship was insured ‘at and from Riga’ to her port ofdischarge in the United Kingdom, and upon arrival at Riga was seized and condemned, it was held that, the vessel once having been in Riga in good physical safety, the risk had attached. Where the risk is to commence at a named port, the word ‘port’ is to be understood in the sense in which it is commonly understood by seamen and merchants, and may be defined as a place resorted to by shipping for the 'l Williamson v Innes (1831) 8 Bing 81n; Foley v United Fire and Marine Insurance Co of Sydney (1870) LR 5 CP 155. ‘2 Parmeter v Cousins (1809) 2 Camp 235. "3 Parmeter v Cousins, supra; Annen v Woodman (1810) 3 Taunt 299; Haughton v Empire Marine Insurance Co (1866) LR 1 Exch 206. ‘4 (1810) 2 Camp 475. See further, Horneyer v Lushington (1812) 15 East 46. 116 Attachment and duration of the risk under the policy discharge and loading of cargo, including even an open roadstead where so . used.'° Thus, where the policy was ‘at and from Carmarthen to London’, it was held that goods loaded at Llanelly were not covered, '6 and a loading at Bridport was held not to be covered by an insurance ‘at and from Lyme to London’.*” Similarly, where an insurance is expressed to be ‘at and from’ an island or other geographical term comprising a number of ports, the term is to be understood in its customary sense, and includes all the ports or places within the named district.'® It will be appreciated that one effect of the attachment of an insurance ‘at and from’ in respect of a homeward voyage may be to cause the vessel to be doubly insured.'® This is usually provided against by a clause ‘risk to commence on expiration of previous policy’. Thus, in Kynance Sailing Ship Co v Young,’ where a ship was insured from Australia to port or ports on the west coast of America, and by a later policy ‘at and from Valparaiso and/or port or ports on the west coast of South America to European ports’, the risk to commence on expiration ofprevious policy, and the vessel discharged part of her Australian cargo at Valparaiso and was lost whilst proceeding thence to Tocopilla with the remainder, it was held that the loss fell within the earlier policy. Alteration of port of departure It is provided by s 43 of the Marine Insurance Act 1906 that: ‘Where the place ofdeparture is specified by the policy, and the ship, instead of sailing from that place, sails from any other place, the risk does not attach.’ Thus, if the vessel were insured for a voyage from London to Sydney, and instead sailed from Liverpool, the policy would not attach. In modern policies the insured vessel is not bound to sail from a particular port, for there is often a term in the policy that the voyage is to be from, eg ‘any port in the United Kingdom’. Sailing for different destination Section 44 of the Marine Insurance Act 1906 states: ‘Where the destination is specified in the policy, and the ship instead of sailing for that destination, sails for any other destination, the risk does not attach.’ Thus, in Woolridge v Boydell? a vessel was insured from Maryland to Cadiz. Cockey v Atkinson (1819) 2 B& Ald 460; Sea Insurance Co of Scotland v Gavin (1829) 4 Bli NS 578; Harrower v Hutchinson*(1869) LR 4 QB 523. '© Payne v Hutchinson (1810) 2 Taunt 405n. '7 Constable v Noble (1810) 2 Taunt 403. See Moxon v Atkins (1812) 3 Camp 200; Brown v Tayleur (1835) 4 Ad&El 241. As to what is meant by “The Baltic’, see Uhde v Walters (1811) 3 Camp 16; ‘The East India Islands’, see Robertson v Money (1824) Ry&M 75; and Robertson v Clarke (1824) 1 Bing 445; ‘Jamaica’, see Camden v Cowley (1763) 1 Wm Bl 417; ‘The West India Islands’, see Cruickshank v Janson (1810) 2 Taunt 301; and Warre v Miller (1825) 4 B&C 538. 19 As to ‘double insurance’, see p 461, post. ' (1911) 104 LT 397. 2 (1778) 1 Doug KB 16. Voyage policies 117 She cleared from Maryland to Falmouth, and was captured in Chesapeake Bay. It was held by the Court of King’s Bench that the policy never attached because the voyage which then had been commenced was not the one insured, so the insurer was not liable. 2 Voyage policies on goods The general rule is that the risk attaches in accordance with the ‘transit’ (‘warehouse to warehouse’) clause.? As in the case ofpolicies on ship, the risk will not attach if the vessel on which the goods are loaded sails from a port not specified in the policy,* or sails for a different destination.° Provided that the terminus a quo and the terminus ad quem remain unaltered, the policy attaches notwithstanding an intention to deviate existing before the inception of the voyage.° In Hewitt v London General Insurance Co Ltd’ the plaintiffs were the insurers of a cargo of nitrate belonging to the assured to be carried from Tocopilla to La Pallice, France, via the Panama Canal. They reinsured their risk with the defendants, the reinsurance policy being subject to the same terms as the original policy. The vessel sailed from Tocopilla with orders to proceed to Beaumont, Texas, unless otherwise instructed at Colon. At Colon the ship received orders to go to New Orleans. She arrived there and took in further cargo. She sailed from there, and was a total loss with all her cargo ina collision. The plaintiffs paid the assured and claimed under the reinsurance policy. One of the grounds on which the defendants denied liability was that the original policy had not attached because the vessel had sailed from Tocopilla with the intention to deviate. Branson J, held that this defence failed, and observed:° ‘Firstly, it is said that the policy never attached at all. It is said that at common law a voyage policy does not attach where the ship sails with an intention to deviate, if the deviation is sufficiently material; that there is no express provision on the point in the Marine Insurance Act 1906; and that consequently the common law rule is preserved by s 91. In my opinion that proposition is untenable. Neither of the two cases? cited by Mr Dickinson supports his contention as to the common law. The cases cited’? by Mr Davies, on the other hand, show conclusively to my mind that at common law the policy will attach, notwithstanding an intention to deviate existing before the inception of the voyage, provided that the terminus a quo and the terminus ad quem remain unaltered. . . . Were the common law otherwise, the statute in my opinion would have altered it, for it expressly provides ins 46 that an intention to deviate is immaterial. There must be a material deviation in fact to discharge liability under the contract. It is of the essence of Mr Dickinson’s argument that the existence of an intention to deviate before the voyage 3 See pp 122-126, post. For an unusual case where it was held that the policy was a voyage policy but that the risk commenced only from a specified date, see Silver Dolphin Products Ltd v Parcels and General Assurance Association Ltd [1984] 2 Lloyd’s Rep 404, QBD (Com Ct). (See the judgment of Neill J, ibid, at 407.) See supra. See supra. Hewitt v London General Insurance Co Ltd (1925) 23 LIL Rep 243, KBD. (1925) 23 LIL Rep 243, KBD. Ibid, at 245. ©OIA8DWA le Way v Modigliani (1787) 2 Term Rep 30; Thames and Mersey Marine Insurance Co Ltd v H T Van Laun & Co (1905) [1917] 2 KB 48n, HL. 10 Te Hare v Travis (1827) 7 B&C 14; Simon, Israel & Co v Sedgewick [1893] 1 QB 303, CA. 118 Attachment and duration of the risk under the policy the voyage a different commences, if the intended deviation is sufficiently material, makes I have referred. voyage. That is expressly negatived, it seerns to me, by the statute to which cases One may add that it would be strange indeed to find the statute providing expressly two of the in which the policy is not to attach, as it does in ss 43 and 44, and making no mention to the third one if the third one in fact existed. The argument founded on suggested hardship insurer, if the law is as thus expressed, fails to impress me.’ ‘Transit’ clause The Institute Cargo Clauses (A),"? (B)* and (C)'? each contain a ‘transit clause’!* which specifies the time when the risk attaches, stating: storage at the ‘This insurance attaches from the time the goods leave the warehouse or place of the ordinary during continues transit, the of commencement the for policy the in place named course of transit...” A similar clause is to be found in the Institute War Clauses (Cargo) *° and the Institute Strikes Clauses (Cargo)."® 3 Voyage policies on freight It has already been noticed that the term ‘freight’ includes not only freight due under a bill of lading, but charter-party freight and the profit to be derived by the shipowner from the carriage of his own goods.’ As far as chartered freight is concerned, Rule 3(c) of the Rules for Construction of Policy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘Where chartered freight is insured at and from a particular place and the ship is at that place ~in good safety when the contract is concluded, the risk attaches immediately. If she be not there when the contract is concluded, the risk attaches as soon as she arrives there in good safety.’ In the case of chartered freight the risk commences as soon as there is an inception of performance by the ship of the terms of the charter-party. Thus, in Foley v United Fire and Marine Insurance Co ofSydney,'® where a vessel was chartered to proceed from Calcutta to Mauritius, there to discharge her cargo and to proceed thence with a return cargo to the United Kingdom, chartered freight was insured ‘at and from Mauritius to the Rice Ports and thence to the United Kingdom’. It was held that, the vessel having been wrecked at Mauritius before her outward cargo had been discharged, there was nevertheless a loss of the homeward freight within the meaning of the policy. With regard to freight other than chartered freight, Rule 3(d) of the Rules for Construction ofPolicy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘Where freight other than chartered freight is payable without special conditions and is insured at and from a particular place, the risk attaches pro rata as the goods or merchandise "Y Clause 8. These clauses are set out in Appendix III, pp 516-519, post. ‘2 Clause 8. These clauses are set out in Appendix III, pp 519-522, post. "3 Clause 8. These clauses are set out in Appendix III, pp 523-526, post. ‘4 The clause was formerly known as the ‘warehouse to warehouse’ clause. "> Clause 5. These clauses are set out in Appendix III, pp 526-529, post. 16 Clause 5. These clauses are set out in Appendix III, pp 530-532, post. ‘7 See p 9, ante. ; ; 18 (1870) LR 5 CP 155. Voyage policies 119 are shipped; provided that if there be cargo in readiness which belongs to the shipowner, or which some other person contracted with him to ship, the risk attaches as soon as the ship is ready to receive such cargo.’ The time when the risk under a freight policy attaches may be varied by express terms. Thus, in Beckett v West of England Marine Insurance Co,'? where a vessel was chartered to carry a cargo from Liverpool to the West Coast of Africa, there to discharge and take on board a return cargo, her homeward freight was insured at and from Lagos under a policy, which contained a clause stating: “The insurance aforesaid shall commence upon the freight and goods or merchandise aforesaid from the loading ofthe said goods or merchandise on board the said ship or vessel at as above.’ The vessel arrived on the West coast of Africa, delivered part of her cargo, and in attempting to cross Lagos Bar to discharge the remainder, ran aground. It was held that the risk had not attached. B_ Duration of the risk The duration of the risk will depend on whether the policy is on ship or on goods. But the risk may terminate even before the time when it usually expires where the adventure has not been commenced within a reasonable time, or there has been a change of voyage, or a deviation of the vessel from the contractual route, or where the adventure is not prosecuted throughout its course with reasonable dispatch, or where the insurance is terminated under a ‘termination’ clause. (1) 1 The general rule Risk on ship The risk on ship ceases on her arrival at the port named in the policy. Whether the ship has arrived or not is a question offact, but the rule is that a ship has arrived when she has reached the place at which ships ofthat tonnage and kind usually cast anchor, and until then she has not arrived.?° Thus, in Stone v Marine Insurance Co Ocean Ltd of Gothenburg’ leave was endorsed on a policy on 2 January enabling a vessel on payment of an extra premium to take her cargo to Antwerp. At Antwerp it was usual for vessels to discharge in the inner dock. On that date, unknown to the parties, the vessel had arrived in the outer dock at Antwerp, and was waiting to go into the inner dock. It was held that the insurer was entitled to retain the additional premium, because at the time the leave was given the risk had not ceased, and would not cease until the ship was berthed in the inner dock. Again, in Samuel v Royal Exchange Assurance the vessel on arriving in London was ordered to go to the King’s Dock at Deptford, but the master moored near 19 (1871) 1 Asp MLC 185. See further, Jones v Neptune Marine Insurance Co (1872) LR 7 QB 702; Hopper v Wear Marine Insurance Co (1882) 46 LT 107; Hydarnes SS Co v Indemnity Mutual Marine Assurance Co [1895] 1 QB 500. 20 Lindsay v Janson (1859) 4 H&N 699. ' (1876) 1 Ex D 81. ? (1828) 8 B&C 119. 120 Attachment and duration of the risk under the policy the dock gates, it being impossible to enter the dock on account of the ice in the river. She remained there some days, and afterwards, when being warped to the docks, she went aground on account of the breaking of the rope. It was held that the vessel had not been moored in good safety, as she had not entered the dock which was her proper place of discharge, and therefore at the time of the loss the risk had not ceased. The ship must be moored in the usual place and manner, so as to be able, if she so desires, to begin to discharge cargo. Thus, in Waples v Eames? a vessel, which was ordered out to the quarantine ground as soon as she dropped anchor, was protected by the policy whilst in quarantine because she was not ‘moored’ within the meaning of the term. But if the vessel is lying where vessels usually cast anchor at the port, and is only waiting to come up to the quay, she is ‘moored’ within the meaning of the clause;* and a ship too large to get inside to her named berth, but moored outside as near as she could be, was held to be ‘moored’.” Where the destination is general—e g the Baltic, or Jamaica, or to ‘ports of discharge’—the risk ceases when the ship has been at the first port of discharge at which she called to discharge the bulk of her cargo.°® Express terms Ofcourse, the protection of the policy may be extended by express terms to the ‘final’ or ‘last’ port of discharge, not necessarily the last port originally intended, but the last available; ’or it may be extended by usage,® or by a new agreement endorsed on the policy.” In Marten v Vestey Bros Ltd'® a vessel was insured ‘from any port or ports place or places on the River Plate... to any port or ports place or places in France and/or United Kingdom (final port)’. She sailed from Buenos Aires to Dakar, and was there ordered to discharge part of her cargo at St Nazaire and the rest at Le Havre. She did so, and then sailed for Barry for bunkers, and was lost on her voyage there. The assured claimed under the policy, but the insurer refused to indemnify him because the words ‘final port’ meant the final port of discharge either in the United Kingdom or in France, and in fact the cargo had been discharged at Le Havre, and accordingly the vessel was not on the insured voyage at the time of the loss. The House of Lords'! held that this defence succeeded, and that the claim failed. Viscount Haldane observed:'? ‘T find it difficult to construe the meaning as being that the ship is to continue insured after she has discharged her cargo, and during an unlimited further period in which she may cruise (1745) 2 Stra 1243; cf Samuel v Royal Exchange Assurance (1828) 8 B&C Angerstein v Bell (1795) | Park’s Marine Insurance (7th Edn), p 55. 119. Whitwell v Harrison (1848) 2 Exch 127. Cruickshank v Janson (1810) 2 Taunt 301; Moore v Taylor (1834) 1 Ad& El 25. Brown v Vigne (1810) 12 East 283; Moore v Taylor, supra. See further, Kynance Sailing Ship Co v Young (1911) 16 Com Cas 123, where the policy was ‘to port or ports of call and/or discharge’. w FF Yann Gregory v Christie (1784) 3 Doug KB 419; Preston v Greenwood (1784) 4 Doug KB 28. Stone v Marine Insurance Co Ocean Ltd of Gothenburg (1876) 1 Ex D 81. [1920] All ER Rep 603, HL. _@ oO 11 12 Viscount Haldane, Lord Dunedin, Lord Atkinson and Lord Buckmaster. [1920] All ER Rep 603 at 604. See also the speech of Lord Dunedin, ibid, at 607-608, that of Lord Atkinson, ibid, at 609-610, and that of Lord Buckmaster, ibid, at 610. Voyage policies 121 from port to port, for instance along the coast of Ireland and in the Hebrides, picking up new freight. I cannot read it as meaning that the ship may turn herself into a tramp going about from port to port indefinitely round the United Kingdom, and still remaining insured although running heavy risks from submarines and otherwise, and yet with no increase of the single premium of27s 6d per cent, which is all that is to be paid. It is difficult to see how terms so vague could define an agreement. I think that, however oddly drawn the document may be, there is one duty from which only an Act of Parliament can absolve Judges who have to construe it, and that is to try to attach some significance to every expression that is at once appropriate and is yet not nullified by other and governing words within the four corners of the instrument. If the practice of Lloyd’s really militated against this principle, serious questions might arise. But I cannot think that it really does so. Applying the test, it appears to me that the words to which I have referred do indicate an intention, not excluded by any other expression the policy, to make the voyage terminate with the discharge of the cargo. That took place in France, and there seems to me to be no reason for supposing that the voyage insured was to extend to an indefinite period following on this discharge. That is surely an interpretation which is as reasonable as it is natural. I may add that I agree with Scrutton LJ, in his impression that the words “‘final port” are not limited to the United Kingdom. They seem to me as they stand in their context to apply to France as well. But, for the reason I have already given, I find it very difficult to take the expression “‘final port”’ so read as satisfied by “the last port in fact in the United Kingdom at which the vessel is’’.’ Again, in Crocker v Sturge,'* where the clause was varied so as to read ‘at and from A to B and to any port or ports, place or places; in any order on the west coast of C, and for 30 days after arrival in a final port, however employed’, the words ‘port or ports, place or places’, coupled with the phrase ‘however employed’, were held not to be limited to ports of discharge, but included ports of loading for the homeward voyage in the district named. In good safety Further, the ship must be moored in physical safety. Thus, a ship which arrived in a sinking condition, and in a short time sank, was never moored ‘in good safety’.'* So also, a vessel which entered a port where there was an embargo on vessels of her nationality was not ‘in good safety’;'* but in the absence of an embargo she was held to be ‘in good safety’, although, in fact, she was seized in the Ott2 In Gambles v Ocean Marine Insurance Co of Bombay'’ a policy was expressed to be ‘at and from Pomaron to Newcastle-on-Tyne and for fifteen days whilst there after arrival’. The ship arrived, and, being chartered for coals outwards, took in some coals as stiffening and moved to a berth to complete her cargo, and whilst there was lost in a storm. The court held that the policy when applied to the period of 15 days must be construed on the same principles as a time policy, and not on the principles applicable to a voyage policy. On this construction the insurers were held to be liable, though, if the policy had remained a voyage policy throughout, they would have been under no liability, as the ship was engaged in something quite unconnected with the voyage insured. 13 [1897] 1 QB 330. See also, Spalding v Crocker (1897) 2 Com Cas 189 and Crocker vGeneral Insurance Company of Trieste (1897) 3 Com Cas 22. 14 Shawe v Felton (1801) 2 East 109. 15 Minett v Anderson (1794) Peake 277; Horneyer v Lushington (1812) 15 East 46. 16 Bell v Bell (1810) 2 Camp 475. 17 (1876) 1 Ex D 141. 122 Attachment and duration of the risk under the policy But in Hunter v Northern Marine Insurance Co,'® where the clause ran ‘whilst in port during thirty days after arrival’, the insurers were held not liable for a loss within the 30 days while the vessel was proceeding in tow down the Clyde outside Greenock, at which port she had discharged her cargo and been repaired. The days are reckoned as consecutive periods of 24 hours each, commencing from the time when the ship is moored at anchor in good safety.'? In Lidgett v Secretan?® the risk was ‘at and from London to Calcutta and for thirty days after arrival’, with the usual 24 hours’ mooring clause. The ship sustained sea damage, and was kept afloat by pumping until her arrival at Calcutta, where she was safely moored till her cargo was discharged, a process which occupied nearly a fortnight. She was then removed to dry dock for repairs, and after the period of 30 days had expired was accidentally destroyed by fire. It was held that there was no liability on the insurers in respect ofeither period, and the loss took place after the 30 days. The construction given to the clause was that after the expiration of 30 days from the arrival and mooring of the vessel, the ship having remained as a vessel and in the possession and control of her owners—though not sound—the insurers were not responsible. 2 Risk on goods ‘Transit’ clause The risk on goods will continue until the happening of one of the events specified in the ‘transit’ clause, which is one ofthe clauses in the Institute Cargo Clauses (A),’ (B)? or (C).? Thus, clause 8 of the Institute Cargo Clauses (A) states: ‘8.1 8.1.1 Sale? ge ¢0 This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either on delivery to the Consignees’ or other final warehouse or place of storage at the destination named herein, on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which the Assured elect to use either for storage other than in the ordinary course of transit or Noe for allocation or distribution, or Soles on the expiry of 60 days after completion of discharge overside of the goods hereby insured from the oversea vessel at the final port of discharge, whichever shall first occur. 8.2 If, after discharge overside from the oversea vessel at the final port of discharge, but prior to termination ofthis insurance, the goods are to be forwarded to a destination other than that to which they are insured hereunder, this insurance, whilst remaining subject 8.3. to termination as provided for above, shall not extend beyond the commencement of transit to such other destination. This insurance shall remain in force (subject to termination as provided for above and to the provisions of Clause 9 below) during delay beyond the control of the Assured, any *8 (1888) 13 App Cas 717. "2 Cornfoot v Royal Exchange Assurance [1904] 1 KB 40; Mercantile Marine Insurance Co v Titherington (1864) 5 B&S 765. 20 (1870) LR 5 CP 190. ' These clauses are set out in Appendix III, pp 516-519, post. ? These clauses are set out in Appendix III, pp 519-522, post. — > These clauses are set out in Appendix III, pp 523-526, post. Voyage policies 123 deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to shipowners or charterers under the contract of affreightment.’ The wording of the clause has varied from time to time. A number of the cases which have interpreted the meaning of the words used in it are considered below. In Allagar Rubber Estates Ltd v National Benefit Assurance Co Ltd* some cases of rubber were insured under a ‘tree to buyer’ policy. The policy contained a clause stating: ‘The risk to commence from time of entry at receiving house on the estate and until safe delivery taken by the purchaser.’ The cases arrived in this country, and some of them were warehoused in a warehouse at Lower Oliver’s Wharf, Stepney, where they were destroyed by fire after they had been there for 8 months. The assured claimed for a loss under the policy, but the insurers contended that the rubber was covered only for a reasonable period, and that in the present case the delay was unreasonable. It appeared that before the First World War 30 days was the usual period for which an assured was covered by this type of policy. It was held by Bailhache J, that the action succeeded. In the absence of a special provision to the contrary, the rubber was covered until delivery to the purchaser. There was no implication that the period was limited except possibly to a reasonable time, but the delay, in fact, had not been unreasonable. He observed:° “The clause says the risk to commence from the time ofentry at receiving house or shed on the estate, and continue until safe delivery is taken by the purchaser. Reading in purely literal terms it might continue for an indefinite time, but it is conceded, and I think must indeed be conceded, that notwithstanding the wide words ofthe clause the risk must come to an end after reasonable delay on the part of the assured in disposing of the goods. On the whole, I have come to the conclusion, having regard to the state of the rubber trade in that year, that the time taken by the plaintiffs was not unusually long under the circumstances, but longer than would be anticipated in an ordinary year. I am confirmed in that opinion by the fact that of the 715 cases plaintiffs disposed of all but 82. On the whole, therefore, I come to the conclusion that the claim succeeds.’ In Re Traders and General Insurance Association Ltd, ex p Continental and Overseas Trading Co® a policy of insurance had been effected in respect of 10 bales of blankets from Antwerp to Calcutta and Karachi. The policy contained a ‘warehouse to warehouse’ clause’ which stated: ‘The insured goods are covered subject to the terms ofthis policy from the time of leaving the shippers’ or manufacturers’ warehouse during the ordinary course oftransit until on board the vessel, during transhipment, if any, and from the vessel whilst on quays, wharves or in sheds during the ordinary course oftransit until safely deposited in consignees’ or other warehouse at destination named in policy.’ In March and April 1920 the assured purchased 10 bales of blankets from a firm in Termonde (in Belgium) which forwarded them on 7 October 1920 from Termonde to Antwerp for shipment on a steamer, which was due to sail from + (1922) 10 LIL Rep 564, KBD. > Ibid, at 565. ® (1924) 18 LIL Rep 450, ChD. 7 Now known as the ‘transit’ clause. See pp 121-122, ante. 124 Attachment and duration of the risk under the policy Antwerp on 12 October. The goods were placed in a warehouse at Antwerp, and were damaged by a fire there on 11 October. The assured claimed for a loss under the policy on the ground that the goods were covered from the time they left Termonde, warehouse or alternatively from the time they were placed in the at Antwerp. The insurers contended that they could not be considered to have insured the goods against a risk, which might involve undisclosed and lengthy land transit, aid which ought specifically to have been mentioned in the specification in those cases in which it was to be included. Further, they maintained that the discharge or delivery at Antwerp was not a delivery from a warehouse but from a barge, and consequently the ‘warehouse to warehouse’ clause did not apply. Eve J, held that the claim failed, and accepted both the above defences pleaded by the insurers. He observed:° ‘The clause undoubtedly extends the liability of the insurers to risk incurred prior to shipment, but the nature and area ofthat extension must, in my opinion, be ascertained in each case by reference to the terms of the specification relating to the particular goods. Where goods are specified as consigned from Paris, Lyons and other centres necessarily involving land transit, the additional risks of that transit would, in my opinion, be covered, but where, as in the case with the two parcels out of which this claim arises, the terminus a quo mentioned in the specification is the port of shipment and the transit is in terms “‘by steamer’, I cannot accept the view that the clause ought to be construed as imposing liability from the commencement of the transit from the factory or, indeed, at any points outside an area which, having regard to the local conditions might fairly be held to be within what [Counsel] has aptly spoken of as the ambit of the terminus a quo. Nor, in my opinion, ought I to treat the discharge ex barge on 8 October as equivalent to the leaving of the warehouse referred to in the clause.’ In Safadi v Western Assurance Co? cotton goods were insured from Manchester to Damascus under a policy containing a ‘warehouse to warehouse’ clause’® which provided (inter alia): ‘When the destination to which the goods are insured is without the limits of the port of discharge of the overseas vessel the risks covered by this policy continue until the goods are safely deposited in the consignee’s or other warehouse at the destination named in the policy or until the expiry of30 days from midnight of the day in which the discharge of the goods hereby insured from the overseas vessel is completed, whichever may first occur. Transhipment, if any, other than as above, and/or delay, arising from circumstances beyond the control of the assured, held covered at a premium to be arranged.’ The goods were discharged at Beirut, and were placed in a Customs warehouse. After being there for about 10 weeks they were destroyed by fire. The plaintiffasassignee’' ofthe policy claimed for a loss under the policy, but the insurers repudiated liability on the ground that the goods were not covered because they had been in the warehouse at Beirut for more than 30 days. The plaintiff, however, maintained that the policy covered delay arising from circumstances beyond his control, and that the delay was due to the unsettled state’? of the territory.between Beirut and Damascus. Roche J, held that the claim failed because the goods had been left in the ® (1924) 18 LIL Rep 450 at 451. ° (1933) 46 LIL Rep 140, KBD. he Now known as the ‘transit’ clause. See pp 121-122, ante. "His Lordship held (obiter) that in any event he was not an assignee ofthe policy: (1933) 46 LIL Rep 140 at 144. As to this point, see pp 319-320, post. '2 For the evidence on this point, see (1933) 46 LIL Rep 140 at 142. Voyage policies 125 warehouse for business reasons, and not because of probable danger to them. He observed:'? ‘I am satisfied that although there may have been some danger ofthe rebels trying to get goods such as these cotton goods, that was not a real danger and it was not one which was influencing Messrs Sabeh and Kahaleh. The truth is that they left the goods in the Customs House at Beirut because they did not want to pay for them. They had got credit and they chose to extend the credit. I am satisfied that it was for supposed business reasons such as those that Sabeh and Kahaleh left the goods in the Customs House at Beirut and not because they were in fact afraid of anything happening to them in transit. It is significant that they did, in fact, give orders to certain forwarding agents to take delivery of the goods on 20 May or thereabouts a few days before they were destroyed. The facts were no different then as regards the security or insecurity of the railway from the condition ofaffairs which had prevailed in the weeks before. So Iam confirmed in my view that there was no real danger, neither was there apprehension of danger, as the governing cause moving Messrs Sabeh and Kahaleh to keep the goods in the Customs House at Beirut.’ He further held that the assured could not rely on the clause concerning ‘circumstances beyond the control of the assured’ because the circumstances as to the state of insurrection in the area were known to the assured when the policy was effected, and said:'* ‘There is this further matter to be borne in mind. There is a good deal of doctrine and authority to the effect that you cannot apply language such as ‘‘cause or circumstances and matters beyond the control of the assured”’ to excuse performance when those causes and circumstances and matters are represented by causes and circumstances and matters in existence and known to be in existence by the person relying upon them at the time he makes the contract from the performance of which he seeks to be excused. These circumstances as to the state of the war and the operations of the Druses were known to everybody at the time these policies were taken out and at the time these goods were sent forward and the documents representing them were sent forward.’ In G H Renton & Co Ltd v Black Sea and Baltic General Insurance Co Ltd‘> timber was insured for a voyage from Igarka to London. The policy contained the Timber Trade Federation Insurance Clauses, clause 2 of which stated: ‘Including risks of. . . non-delivery . . . from the time of leaving mill, warehouse, factory, yard or premises at the place from which the goods are loaded . . . whilst on board the ocean-going vessel until discharged at the port of destination; and whilst in transit by land and/or water to final destination there or in the interior.’ In accordance with the usage of the Port of London, the cargo was discharged from the ship on to the quay alongside, and stacked regardless of marks, size or description. It was subsequently sorted by the Port of London Authority and piled in a shed. The discharge of the goods began on 23 September. It was completed on 12 October. Meanwhile the piling began on 26 September and finished on 7 November. Counting started on that date, and continued until a day or two before 30 November when the landing returns were made out. A part of the cargo was then found to be missing. The assured claimed for a loss under the policy, but the insurers contended that the risk had ended when the goods were discharged on to the quayside. Lord Caldecote LCJ, accepted this contention, and held that the claim failed. The final destination could not be determined by reference to the right which 13 Ibid, at 142. 14 Ibid, at 143. 15 11941] 1 All ER 149, KBD. 126 Attachment and duration of the risk under the policy the assured had from the Port of London Authority to take possession of the cargo after it had been sorted and landing returns made out. The final destination was the shed or space to which the cargo was delivered on the quayside. His Lordship observed:'® ‘The question which arises in this case, on the facts of the case, is whether the final destination was the place at which the goods arrived when they were bulked or stacked, or whether the final destination had not then been reached. In the view which I have formed, the facts do not justify a conclusion that the goods were still in transit for the purposes ofthis clause after they had reached the quayside or the shed in which they were placed in bulk. If the [assured’s] contention is right, the final destination of the cargo, which might be taken in exceptional circumstances from the pile, but before the piling is completed and before the counting is completed, would be different from the final destination in the case of goods which had to wait until the final piling and counting had been finished. I think that the final destination for the purposes of this case and this particular parcel of goods was the shed or the space to which the goods were delivered, and the mere fact that they had been moved to another part of that shed and piled according to their marks seems to me to make no difference at all. It is quite conceivable that the goods might have been put under their marks and sizes as they were delivered from the ship, but, according to the usage of the port, the goods are bulked without regard to their marks and sizes, and the fact that they were moved to another part ofthe shed does not, in my view, prevent the shed from being their final destination.’ (2) 1 Exceptions to the general rule Implied condition as to commencement of adventure Section 42(1) of the Marine Insurance Act 1906 states: ‘Where the subject-matter is insured by a voyage policy ‘“‘at and from”’ or ‘‘from”’ a particular place, it is not necessary that the ship should be at that place when the contract is concluded, but there is an implied condition that the adventure shall be commenced within a reasonable time, and that if the adventure be not so commenced the insurer may avoid the contract.’ The effect of delay in the commencement of an adventure may be to vary the risk from that which was within the contemplation of the parties to the contract of insurance. A summer risk may become a winter one or may, for other reasons, become more hazardous. Thus, in De Wolf v Archangel Marine Insurance Co,’ where a policy ‘at and from Montreal to Monte Video’ was made on 13 July, and the ship did not arrive at Montreal until 30 August this was held to be an unreasonable delay as it caused the voyage to become a winter instead of a summer risk. Accordingly, the insurer was held entitled to avoid liability under the policy. The implied condition, however, may not apply in every case, for s 42(2) of the Marine Insurance Act 1906 states: ‘The implied condition may be negatived by showing that the delay was caused by circumstances known to'the insurer before the contract was concluded, or by showing that he waived the condition.’ In Bah Lias Tobacco and Rubber Estates v Volga Insurance Co Ltd'® the insured effected a policy in June 1917 in respect of the 1916-17 tobacco crop ‘at and 16 Tbid, at 151. *7 (1874) LR 9 QB 451. See Hull v Cooper:(1811) 14 East 479; Mount v Larkins (1831) 8 Bing 108; Maritime Insurance Co v Stearns [1901] 2 KB 912. *8 (1920) 3 LIL Rep 155 at 202, KBD (Com Ct). Voyage policies 127 from Sumatra to London and/or ports in Holland’. The policy included the risk of fire antecedent to shipment. On 18 July part of the crop was destroyed by fire whilst it was in store in Sumatra. A claim was made under the policy, but the insurers refused to indemnify the assured on the ground that there had been unreasonable delay in the commencement of the adventure. ShearmanJ, held that the defence failed, and that the claim succeeded. Since the insurers had accepted an additional premium to cover a period during which the loss occurred, they were precluded from raising the defence of unreasonable delay. 2 Change of voyage It is provided by s 45 of the Marine Insurance Act 1906 that: ‘(1) Where after, the commencement of the risk, the destination of the ship is voluntarily changed from the destination contemplated by the policy, there is said to be a change of voyage. (2) Unless the policy otherwise provides, where there is a change of voyage, the insurer is discharged from liability as from the time of change, that is to say, as from the time when the determination to change it is manifested; and it is immaterial that the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs.’ Whether the determination to change the destination contemplated by the policy is a matter of fact in each case. The insurer is only entitled to avoid liability if the voyage has been changed voluntarily. In Rickards v Forestal Land, Timber and Rlys Co Ltd‘° a cargo was insured for carriage on a German vessel from South American ports to Hong Kong or Shanghai. The vessel arrived at Rio on 25 August 1939. War was declared on 3 September 1939. Her master sailed from Rio on 6 September 1939 in compliance with an order from the German Government that all German vessels should seek refuge in neutral ports or to return to Germany, or as a last resort to scuttle themselves. Subsequently she was scuttled off the Faroe Islands to avoid capture by a British warship. One of the issues which arose was whether there had been a ‘change of voyage’ within s 45(1) of the Marine Insurance Act 1906. The House of Lords”® held that there had been no such change because the destination of the vessel had not been voluntarily changed as required by that subsection. Lord Wright said:' ‘There was a change of voyage when the vessel sailed from Rio on the voyage or adventure to run the blockade on the orders of the German Government. That change of voyage was certainly not voluntary. On that ground, therefore, it could not be said that the insurer was discharged from liability under s 45(2) of the Act, because the change of voyage which discharges the underwriter is defined in s 45(1), and the definition includes the element that the voyage is voluntarily changed.’ Lord Porter observed :? ‘It is said, however, that, in addition to, or instead of, deviating, the master at some stage changed his voyage. I do not think that he did in the sense in which those words are used in the 19 [1941] 3 All ER 62, HL. 20 Viscount Simon LC, Viscount Maugham, Lord Thankerton, Lord Wright and Lord Porter. 1 [1941] 3 All ER 62 at 78. 2 Ibid, at 96. ny 128 Attachment and duration of the risk under the policy Marine Insurance Act 1906. Change of voyage is now defined in s 45 of the Act as occurring when, after the commencement ofthe risk, the destination of the ship is voluntarily changed from the destination contemplated by the policy. There was no voluntary change in the case of the Minden. The master was acting, not on his own initiative, but on the orders which, to use the words of Lord Ellenborough in Phelps v Auldjo,* morally as a good subject he ought not to have resisted.’ Even where there has been a change of voyage, the insurer will still be liable if the assured can bring himself within the terms of a ‘held covered’ clause in the policy, eg clause 10 of the Institute Cargo Clauses (A)* states: ‘Change of Voyage Clause. Where after attachment of this insurance the destination is changed by the Assured, held covered at a premium and on conditions to be arranged subject to prompt notice being given to the underwriters.’ Again, clause 2 of the Institute Voyage Clauses (Hulls)° states: ‘Change ofvoyage. Held covered in case of. . . change of voyage. . . provided notice be given to the Underwriters immediately after receipt of advices and any amended terms ofcover and any additional premium® required by them be agreed.’ In Wilson v Boag’ a motor launch was insured under a time policy from 12 February 1953 to 30 June 1953, and a clause stated that she was covered ‘whilst the same is used for private and pleasure purposes only on the waters of Port Stephens and within a radius of 50 miles thereof against all loss or damage caused by stress of weather, stranding, any latent defect in the machinery or hull or by negligence of paid hands, and against salvage charges.’ During the period of the policy she left Port Stephens on a voyage undertaken for private and pleasure purposes to Sydney which was 90 miles away. While she was still within the 50-mile perimeter, she became disabled, drifted for several days, and salvage charges were incurred. The plaintiff (suing as the executrix of the assured) claimed an indemnity in respect of the salvage charges, but the insurer disclaimed liability on the ground that there had been a ‘change of voyage’ within the meaning of s 51 of the (Australian) Marine Insurance Act 1909,° for at the time of the loss she was proceeding to Sydney which was a port outside the 50-mile radius, and not a port of destination contemplated by the policy. The Supreme Court of New South Wales” held that the policy should be regarded as a time policy under which the insurer was liable for losses occurring within the defined geographical area irrespective of the voyage on which the vessel was engaged, and observed:'° ‘On the whole we are ofopinion that the policy here in question should not be construed as a voyage policy attaching only to voyages intended to begin and end within the perimeter and to remain wholly within it. It is to be regarded rather as a time policy in which is contained a limitation ofthe liability of the insurer to loss sustained while the launch is within a defined geographical area. We think that the policy covers loss occurring within the perimeter even a (1809) 2 Camp 350. These clauses are set out in Appendix III, pp 516-519, post. These clauses are set out in Appendix III, pp 533-540, post. For the payment of an additional premium, see p 80, ante. [1956] 2 Lloyd’s Rep 564 (NSW). Which corresponds to s 45 of the (English) Marine Insurance Act 1906. KDwn Ww & or o Street CJ, and Owen and Walsh JJ. 10 [1956] 2 Lloyd’s Rep at 565. Voyage policies 129 though the launch was then in the course ofproceeding to a point outside it. That seems to us to be the natural meaning to be given to the relevant words. There appear to be no reported cases precisely in point, and to apply the rules of law relating to commercial voyage policies to this case seems to us to be somewhat unreal, and not to be warranted by anything to be found in the terms of the contract.’ 3 Deviation Section 46 of the Marine Insurance Act 1906 states: ‘(1) Where a ship, without lawful excuse,'! deviates from the voyage contemplated by the policy, the insurer is discharged from liability as from the time of deviation, and it is immaterial that the ship may have regained her route before any loss occurs. (2) There is a deviation from voyage contemplated by the policy— a Where the course of the voyage is specifically designated by the policy, and that course is departed from; or b Where the course of the voyage is not specifically designated by the policy, but the usual and customary course is departed from. (3) The intention to deviate is immaterial; there must be a deviation in fact to discharge the insurer from his liability under the contract.’ The extent of the deviation has no bearing on its effect. It is immaterial whether the deviation is trivial or extensive.'? The deviation will not be cured even if the ship returned to her proper course before any loss occurred.'* Nor need the insurer prove a connection between the deviation and the loss. It is enough that the policy has been avoided by the variation of the risk which the deviation introduced.'* Where the course 1s specifically designated Where the voyage is described or defined in the policy with any detail, the vessel must follow the route specified, customarily taken by shipping. Thus, in Elliot v Wilson:'* even though it may be one not Goods were insured from Carron to Hull with liberty to touch at Leith. A loss occurred after the vessel had proceeded to Morrison’s Haven, which was a place at which all vessels sailing down the Firth of Forth habitually touched. Held, the insurers were not liable. Where the course of the voyage 1s not specifically designated The voyage set out in the policy must be performed in the way in which voyages of that class are usually performed. Any departure from the course usually taken by vessels pursuing ova of that class will be a deviation. Thus, in Clason v Simmonds:' A policy described the voyage as ‘at and from London to her ports of discharge in the Straits as high as Messina with power to stop or stay at any ports in places whatsoever’. The ship called at Falmouth, at which port it was unusual for ships on that voyage to call. Held, that this was a deviation. 1! For the circumstances in which deviation is excused, see s 49, and pp 133-134, post. 12 Elliot v Wilson (1776) 4 Bro Parl Cas 470. 13° Way v Modigliani (1787) 2 Term Rep 30. 14 Elhot v Wilson, supra; Davis v Garrett (1830) 6 Bing 716; Thompson v Hopper (1858) EB&E 1038. 15 (1776) 4 Bro Parl Cas 470. 16 (1741) cited in 6 Term Rep 533. 130 Attachment and duration of the risk under the policy Further, where it is customary for vessels engaged in certain classes of trade to perform intermediate voyages not specified in the policy, a ship engaging 1n such an intermediate voyage is not guilty of a deviation. Mere intention not a deviation A mere intention or design to deviate has per se no effect on the contract, ane unless it is carried into effect, will not vary or in any way affect the risk. Thus, in Kingston v Phelps:'° The master sailed with an intention of deviating to call at an unauthorised port. Before reaching the point at which the deviation was to take place he was forced by stress of weather into that very port. Held, that there was no deviation, for the intention was never carried into effect, and the actual deviation arose from necessity and was therefore excused.”° Several ports of discharge The Marine Insurance Act 1906, s 47 states: ‘(1) Where several ports of discharge are specified by the policy, the ship may proceed to all or any of them, but, in the absence of any usage or sufficient cause to the contrary, she must proceed to them, or such of them as she goes to, in the order designated by the policy. If she does not there is a deviation. (2) Where the policy is to “ports of discharge”, within a given area, which are not named, the ship must, in the absence ofany usage or sufficient cause to the contrary, proceed to them, or such ofthem as she goes to, in their geographical order. If she does not there is a deviation.’ Moreover, to revisit is to deviate.’ There is, however, no obligation on the ship to call at all the ports named, and where several ports of discharge are specified by the policy and she clears for only one of them, this is not a deviation.” If the ports are not particularly specified, they must be visited in the order in which they lie on the ship’s course, ie in their geographical order. Thus, in The Dunbeth? a ship proceeding from Gibraltar was held to be guilty ofadeviation when she called at King’s Lynn and then went to Cardiff, instead of taking those ports in the reverse order. Liberty to touch and stay The policy may contain a clause stating that a vessel has ‘liberty to touch and stay at any port whatsoever.’* Rule 6 of the Rules for Construction ofPolicy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘In the absence of any further license or usage, the liberty to touch and stay “at any port or / Vallance v Dewar (1808) 1 Camp 503; Ougier v Jennings (1800) 1 Camp 505n. Foster v Wilmer (1746) 2Stra 1249; Heselton v Allnutt (1813) 1 M&S 46. tC) (1795) cited in 7 Term Rep 165; Carter v Royal Exchange Assurance (prior to 1746), cited in 18 20 2 Stra 1249; Thellusson v Fergusson (1780) 1 Doug KB 360; Kewley v Ryan (1794) 2 Hy BI 343. See now Marine Insurance Act 1906, s 49(1)(d). Beatson v Haworth (1796) 6 Term Rep 531; Marsden v Reid (1803) 3 East 572. Marsden v Reid, supra. [1897] P 133. But it should be noted that there is no such clause in the Institute Voyage Clauses (Hulls), which : are set out in Appendix III, pp 540-547, post. WN Voyage policies 131 place whatsoever” does not authorize the ship to depart from the course of her voyage from the port of departure to the port of destination.’ The liberty to touch and stay will be construed and limited with reference to the general purposes of the voyage.” Thus, in Gairdner v Senhouse® Sir James Mansfield said: ‘And the larger the words are, the more necessary is this construction, else the ship might trade and barter without any termination.’ Accordingly, a ‘liberty to stop and stay at any port or places whatsoever’® gives no liberty to call at a port quite unconnected with the purposes of the voyage.” / So also, however wide the wording of the policy may be, the liberty to stay must be construed with regard to the main object of the adventure, and a liberty to stay ‘for any purpose whatsoever’ will only cover purposes connected with the objects of the voyage. In Bragg v Anderson’® a vessel was insured ‘at and from Martinique and all or any of the West Indian Islands to London, with liberty in that voyage to proceed and sail to and touch at any ports or places whatsoever’. She sailed from Martinique for St Domingo, where she loaded a cargo for London. In holding that there had been no deviation, Mansfield CJ, said:!! ‘There is not getting over these words; instead of“all’’, you must substitute the words ‘‘some of the West Indian Islands, such as lie between Martinique and London’’, and you would make quite a new engagement.’ In Leathly v Hunter'* goods were insured by the ships ‘Albion, Bolivar, Java Packet, and Blora’, ‘all or any as interest might appear and with leave to declare the same thereafter at and from Singapore, Penang, Malacca, and Batavia, all or any, to the ship’s port or ports of discharge in Great Britain or to any port or ports in the United Netherlands or to Altona or Hamburg, or all or any, with leave to touch, stay, and trade at all or any ports or places whatsoever and wheresoever in the East Indies, Persia, or elsewhere or in any direction and for any purpose necessary or otherwise, particularly Singapore, Penang, Malacca, Batavia, the Cape of Good Hope, and St Helens’. A quantity of coffee was loaded on the ‘Java Packet’ at Batavia, whence the vessel sailed for Sombaya, which lies some 400 miles to the east of Batavia and out of the course from Batavia or any of the other three named ports to Europe. It was held that there had been no deviation. In Solly v Whitmore’? a policy described the risk as ‘at and from Hull to her 5 Barclay v Stirling (1816) 5 M&S 6; Leathly v Hunter (1831) 7 Bing 517; Brown v Tayleur (1835) 4 Ad&El 241. © (1810) 3 Taunt 16. 7 Ibid, at 22. See also, Glynn v Margetson & Co [1893] AC 351. 8 The words ‘any port or ports whatsoever’ will include ‘places’, if the purpose of the voyage so requires: Cockey v Atkinson (1819) 2 B& Ald 460. See also Brown v Tierney (1809) 1 Taunt 517, cited in 4 Taunt 394. > Clason v Simmonds (1741) cited in 6 Term Rep 533. 10 (1812) 4 Taunt 229. "! Ibid, at 230. 12 (1831) 7 Bing 517. See also, Bottomley v Bovill (1826) 5 B&C 210; Andrews v Mellish (1814) 5 Taunt 496; Metcalfe v Parry (1814) 4 Camp 123; Armet v Innes (1820) 4 Moore CP 150. 13 (1821) 5 B&Ald 45. 132 Attachment and duration of the risk under the polucy port or ports of loading in the Baltic Sea and Gulf of Finland, with liberty for the ship in the said voyage to proceed and sail to and touch and stay at any ports or places whatsoever and wheresoever for all purposes, particularly at Elsinore, without it being deemed a deviation’. The ship delivered goods at Elsinore and Danzig. It was held that there had been a deviation. Abbott CJ, said:'* ‘The liberty given by this policy to ‘“‘touch at any ports for all purposes” must be construed to mean purposes connected with the voyage. Here the voyage was from Hull toa loading port in the Baltic, and if the ship had gone to Elsinore or Danzig to see if she could get a cargo, that would have been a purpose connected with the voyage, and consequently would not have been a deviation. But the vessel in fact went to those ports for the purpose of delivering goods, which was wholly unconnected with the voyage insured. I am therefore of opinion that this was a deviation.’ In Hammond v Reid'* a vessel was insured ‘at and from Para to New York, during her stay there and at and from thence to Para, with leave to call at all or any of the Windward or Leeward Islands and colonies on her passage to New York, with leave to discharge, exchange and take on board the whole or any part of any cargo or cargoes at any port or places she might call at or proceed to, particularly at all or any of the Windward or Leeward Islands’. She sailed from Para for New York, but with orders to proceed first to Barbados, where the master was directed to load an exchange cargo. This was done, and the vessel left Barbados for New York, intending to call on her way at St Bartholomew’s and St Thomas’s Islands in order to ascertain the state of the markets there for the purpose of another cargo, which her owner proposed to ship by another vessel. It was held that there was a deviation in putting into St Bartholomew’s and St Thomas’s Islands. Intermediate voyages In the case of‘intermediate voyages’ the same principle applies, and the ship is ‘protected by the policy so long only as she is sailing on an intermediate voyage undertaken with a view to the accomplishment of one or other of the voyages pointed out by the policy as the principal object in the contemplation of the parties’.*® Trading at port of call So strictly was the rule applied that it was formerly held that ‘liberty to touch and stay’ did not permit oftrading at the port ofcall, and where a ship took ina fresh cargo at a port of call, it was held to be a deviation, although it produced no Oe, the ship being delayed through waiting for a convoy or by an adverse wind. Nowadays, however, trading at a port ofcall will not be a deviation ifthere is no additional delay or change of risk caused by it. a ‘4 Thid, at 46. ** (1820) 4 B& Ald 72. See also, Violett v Allnutt (1811) 3 Taunt 419; Langhorn v Allnutt (1812) 4 Taunt 511; Williams v Shee (1813) 3 Camp 469; Bottomley v Bovill (1826) 5 B&C 210; Company ofAfrican Merchants v British and Foreign Marine Insurance Co (1873) LR 8 Exch 154; Laing v Union Marine Insurance Co (1895) 1 Com Cas 11. ‘© Bottomley v Bovill (1826) 5 B&C 210 at 218 (per Abbott CJ). "7 SheriffvPotts (1803) 5 Esp 96. See also, Stitt v Wardell (1797) 2 Esp 610. Voyage policies 133 Thus, in Raine v Bell'® Lawrence J, said:!? ‘Ifthe doing of'a thing do not alter the risk of the underwriter and be not expressly prohibited to be done, I cannot say that it vitiates the policy.’ The rule that the principles of law relating to deviation apply whether the policy is on goods or on ship, extends to this phase of it also so that, if the policy is on goods, the ship may trade at ports of call ifshe can do so without alteration of the risk.?° But if such trading at the port of call, where there is only a liberty to touch and stay, causes additional delay, or otherwise varies the risk, it will be a deviation.! Transhipment Where it is clearly necessary for the preservation of the goods to tranship them, they are protected on board the new ship until they are landed at the port of destination named in the policy or intended by the parties.” But if there is no liberty to tranship the cargo, the necessity for doing so must be very clear, otherwise the transhipment may amount to a deviation.? Where transhipment does not put an end to the risk, the insurer is liable for any loss which may occur in the course of transhipment, landing, and reshipment, including risk of lighterage where customary. Section 59 of the Marine Insurance Act 1906 states: ‘Where, by a peril insured against, the voyage is interrupted at an intermediate port or place, under such circumstances as, apart from any special stipulation in the contract of affreightment, to justify the master in landing and re-shipping the goods or other moveables, or in transhipping them, and sending them on to their destination, the liability of the insurer continues, notwithstanding the landing or transhipment.’ Where the policy contains a ‘transit’ clause, the risk continues during transhipment. Thus the Institute Cargo Clauses (A),° (B)® and (C)’ state: ‘This insurance shall remain in force . . . during transhipment . .’ Excuses for deviation Section 49(1) of the Marine Insurance Act 1906 states: ‘Deviation or delay in prosecuting the voyage contemplated by the policy is excused— a Where authorised by any special term in the policy; or b Where caused by circumstances beyond the control of the master and his employer; or c Where reasonably necessary in order to comply with an express or implied warranty; or d Where reasonably necessary for the safety of the ship or subject-matter insured; or 18 (1808) 9 East 195. ‘9 Ibid, at 201. 20 Laroche v Oswin (1810) 12 East 131. ' Williams v Shee (1813) 3 Camp 469. 2 De Cuadra v Swann (1864) 16 CBNS 772; Oliverson v Brightman (1846) 8 QB 781. 3 Oliverson v Brightman, supra. + Tierney v Etherington (1743) cited in | Burr at 348; Olwerson v Brghiman, supra; Australian Agricultural Co v Saunders (1875) LR 10 CP 668. > These clauses are set out in Appendix III, pp 516-519, post. These clauses are set out in Appendix III, pp 519-523, post. a These clauses are set out in Appendix III, pp 523-526, post. my 134 Attachment and duration of the risk under the policy. e For the purpose of saving human life, or aiding a ship in distress where human life may be in danger; or f Where reasonably necessary for the purposes of obtaining medical or surgical aid for any person on board the ship; or g Where caused by the barratrous conduct of the master or crew, if barratry® be one ofthe _ perils insured against.’ In Forestal Land, Timber and Rlys Co Ltd v Rickards,? where a German vessel carrying the insured goods was ordered by the German Government to seek refuge at a neutral port on the outbreak of the Second World War, and her master did so, the House of Lords’® held that the deviation was excused under s 49(1)(b).'' Lord Wright said:'* ‘The deviation thus comes within the protection of s 49(1)(b) of the Act, which enacts that deviation is excused (inter alia) where it is caused by circumstances beyond the control of the master and his employer. Here the deviation was caused by circumstances beyond the control of the master, who was, as already stated, bound to obey the orders of hisGovernment equally with his employer, the German shipowner. The deviation was certainly beyond the control of the assured, if that is material.’ Effect of the ‘transit’ clause It should be noted that where there is a ‘transit’ clause’* in the policy, the goods are still covered even though there has been a deviation for the clause states: ‘This insurance shall remain in force ... during any deviation... ? Duty to resume course Section 49(2) of the Marine Insurance Act 1906 states: ‘When the cause excusing the deviation. . . ceases to operate, the ship must resume her course, and prosecute her voyage, with reasonable dispatch.’ But it is not necessary for her to return to the point of deviation and pursue her original route.'* ‘Held covered’ clause Although the general rule is that the insurer is entitled to avoid liability under the policy where there has been a deviation, he cannot do so where the assured brings himself within the terms of a ‘held covered’ clause eg clause 2 of the Institute Voyage Clauses (Hulls)'*® which states: See pp 122-126, ante. ° (1941) 70 LIL Rep 173, HL. Viscount Simon LC, Viscount Maugham, Lord Thankerton, Lord Wright and Lord Porter. Their Lordships reached a similar conclusion in Middows Ltd v Robertson and W W Howard Bros & Co Ltd v Kann (which were heard and reported with Forestal Land, Timber and Rlys Co Ltd v Rickards, supra, where the same point arose). (1941) 70 LIL Rep at 189. See also the speech of Lord Porter, ibid, at 201, where his Lordship also said: “The master’s act was both necessitated by moral force and reasonably necessary for the safety of the ship which unless such steps were taken, might well fall into the hands ofthe British Navy.’ For the ‘transit’ clause, see pp 122-126, ante. ‘4 Delany v Stoddart (1785) 1 Term Rep 22. "> These clauses are set out in Appendix III, pp 540-547, post. Clause 3 of the Institute Voyage Clauses (Freight), which are set out in Appendix III, pp 555-558, post) is in the same terms. 13 Voyage policies 135 ‘Held covered in case of deviation . . . provided notice be given to Underwriters immediately after receipt of advices and any amended terms of cover and any additional premium'® required by them be agreed.’ Whether the notice has been given promptly will, of course, depend on the circumstances. Usually such a clause requires the assured to give prompt notice of the deviation to the insurers. If he does not do so, the insurers will not be liable for any loss of or damage to the subject-matter insured. In Hewvtt v London General Insurance Co Ltd’’ a cargo of nitrate was insured for a voyage from Tocopilla to La Pallice, France. The policy contained a clause which stated: ‘In the event of the voyage being changed or of any deviation from the terms ofthis policy the same to be held covered at premium to be arranged hereafter.’ The insurers reinsured their risk under a reinsurance policy which was expressed to be ‘subject to the same terms, clauses and conditions’ as the original policy. The vessel deviated to New Orleans, and was subsequently lost with all her cargo. The insurers paid the sum insured to the original assured, and claimed an indemnity from the reinsurers. The reinsurers, however, repudiated liability on the ground’® that the insurers had failed to give notice of deviation within a reasonable time, and that therefore they could not rely on the ‘held covered’ clause. Branson J, held that this defence failed. The insurers did not know of the deviation until the loss had happened, and then they found it out only because the loss was posted at Lloyd’s and advertised in the ordinary way. Once the loss had occurred no practical benefit would have accrued to the reinsurers from being told any sooner than they, in fact, were told of the deviation or subsequent loss. They knew it as soon as the knowledge was of any good to them at all. His Lordship added:'® ‘That being so the case of Mentz, Decker & Co v Maritime Insurance Co*® shows that a delay in giving notice is no bar to the [assured] recovering. HamiltonJ, says’ regarding the deviation clause: ““The clause must be read as it stands, and I think it is a mutual agreement to hold covered subject to a proviso which is satisfied by the giving of such notice which the assured can give after the receipt of advice, and as there was nothing practicable to be done on the receipt ofthe advice, the notice was given sufficiently early for the purposes of the present case at the time it was given.” I asked here if it could be suggested that anything practicable could have been done by [the insurers] had they received notice any earlier than they did, and I was told that nothing could be suggested.’ 4 Delay in voyage The Marine Insurance Act 1906, s 48 states: '© For the payment of an additional premium, see p 80, ante. "7 (1925) 23 LIL Rep 243, KBD. 18 Other grounds on which they repudiated liability were that the assured under the original policy had no interest at the time ofthe loss, and that the risk under the original policy had not attached. As to these aspects respectively. 19 (1925) 23 LIL Rep at 246. 20 (1909) 15 Com Cas 17. " Ibid, at 27. of the case, see pp 467-468, post, and pp 117-118, ante, 136 Attachment and duration of the risk under the policy . ‘In the case ofavoyage policy, the adventure insured ee n be prosecuted throughout its course with reasonable despatch, and, if without lawful excuse? it is not so prosecuted, the insurer is discharged from liability as from the time when the delay became unreasonable.’ Not only must the voyage be commenced within a reasonable time and be carried out without deviation from the vessel’s proper course, but it must be prosecuted with reasonable despatch. Thus, any unreasonable delay in the course of the voyage is equivalent to a deviation and has the same effect in avoiding the policy.? The question ag to what is a reasonable delay depends upon the circumstances of oe case.* Thus, in Mount v Larkins:° A master ofa vessel stayed so long at a port of call that he was able to build a house and also to fit out a schooner on a sealing voyage, manning her with sailors from the insured ship. Held, the insurer could avoid liability. Tindal CJ, said:® ‘The voyage, commenced after an unreasonable interval of time, would have become a voyage at a different period of the year, at a more advanced age ofthe ship, and, in short, a different voyage than if it had been prosecuted with proper and ordinary diligence.’ But where a ship was detained in a river by ice, and was thereby prevented from getting into dock, it was held that there was no unreasonable delay.’ Similarly, where the delay was caused by the ship waiting to get a crew, Lord Ellenborough said: ‘To discharge the policy there must be a clear imputation ofwaste of time. Mere length of time elapsing between the sailing of the vessel and the underwriting of the policy is not of itself sufficient to avoid the policy; it is capable of explanation.’ Delay in order to obtain cargo has been held to bejustifiable.® Burien, delay while awaiting permission to land a cargo has also been excused.” Again, where a ship with liberty ‘to touch, stay and trade’ remained in one of the ports from 3 June to 10 January following, it was said that the delay was not unreasonable See it had arisen from necessary repairs and the state of the freight market.’ But where a ship sailed to Benin and remained there for 13 months on purposes VERO 3s with the insured voyage, the delay was held to be unreasonable. ' Again, where goods en route were kept for a month at a railway station, the delay was held to be too long, and consequently the insurer was discharged. a In British American Tobacco Co v Poland‘? the assured insured a quantity of See Marine Insurance Act 1906, s 49(1). Hartley v Buggin (1781) 2 Park 652. Marine Insurance Act 1906, s 88. (1831) 8 Bing 108. Ibid, at 122. R Samuel v Royal Exchange Assurance (1828) 8 B&C 119. Schroder v Thompson (1817) 7 Taunt 462. oO WN & oarntinn Bain v Case (1829) 3 C&P 496. Phillips v Irving (1844) 7 Man&G 325. Hamilton v Sheddon (1837) 3 M&W 49. —_Oo NF a derabad (Deccan) Co v Willoughby ee > (1921) 7 LIL Rep 108, CA. 2 QB 530. Voyage policies 137 twine under a Lloyd’s policy against a number of risks including fire for a voyage from London to Kavella, a port in Greece, on the ‘Bosphorw’ or other steamer. Under normal conditions the goods would have been shipped by a through bill of lading and have been transhipped at Piraeus to a coasting steamer for carriage to Kavella. Owing to war conditions the only means of forwarding the goods was to consign them to the British Consul at Piraeus, and request him to forward them. They were delayed at Piraeus for 3 months whilst awaiting a permit from the British Government.'* On arrival off Kavella a coasting steamer to which the goods had been transferred was refused permission to land them, so her master decided to take them back to Piraeus for further instructions. On the return voyage the goods were destroyed by fire. The assured claimed for a loss under the policy, but the insurer refused to pay on the ground that there had been an unreasonable delay at Piraeus. The Court of Appeal’® rejected this contention and held that the action succeeded, for there had been no unreasonable delay.'® Bankes LJ, said!” that he agreed with the judgment of BailhacheJ, in the court below’? on that point. BailhacheJ, had said’” that there had been undoubtedly a considerable loss of time at Piraeus, but the goods had been shipped on board the coasting steamer at the very earliest opportunity. In Niger Co Ltd v Guardian Assurance Co and Yorkshire Insurance Co?° the plaintiffs were West African merchants. They insured some goods against all risks from West and South West Africa. The policy covered them in the interior of Africa and during the period when they were awaiting re-shipment at Burutu. The plaintiffs’ course of business was to collect native produce in the interior and transport it down the Niger at stated periods to Burutu, where it was stored awaiting shipment overseas. A fire took place at Burutu in January 1916 and the goods were destroyed. Owing to war conditions they had been lying at Burutu for varying periods up to 8 months. The plaintiffs claimed under the policy, but the insurers repudiated liability’ on the ground that the delay in shipment which had taken place at Burutu constituted a failure to prosecute the adventure with reasonable dispatch within the meaning ofs 48 of the Marine Insurance Act 1906. It was held by the House of Lords? that this defence failed, and that the action succeeded. The policy showed that the parties contemplated a reasonable delay at Burutu awaiting re-shipment and, in the circumstances prevailing in January 1916, the delay was not unreasonable. A permit was necessary because Kavella was being blockaded as there were considerable doubts as to the position taken up by the Greek army, and as to whether they would be likely to be loyal to the Allies or go over to Germany. See on this point the judgment of BailhacheJ, in the court bUS} below: (1920) 5 LIL Rep 347 at 348, KBD. Bankes, Warrington and Scrutton LJJ. 6 (1921) 7 LIL Rep at 109. 17 Thid, at 109. ‘8 (1920) 5 LIL Rep 347, KBD. *? Ibid, at 349. 20 (1922) 13 LIL Rep 75, HL. Another defence was that there had been non-disclosure of a material fact, viz that there was a large accumulation of goods at Burutu. As to this point, see pp 67-68, ante. Lord Buckmaster, Lord Atkinson, Lord Sumner and Lord Wrenbury. PS) N 138 Attachment and duration of the risk under the policy Lord Buckmaster observed:* ‘It was then urged that there had been unreasonable delay in forwarding the goods, evidenced of by the amount ofthe goods in the warehouse at the time ofthe fire. This is largely a question fact, and has been found adversely to the appellants in both the courts. I agree with the decisions so reached; the facts that the high river season was just passed, that the river had been good, so that abundant produce had been shipped, and the scarcity of shipping are sufficient of to explain the quantity of produce, which was stated to be equivalent to a collection eight months. The figures as to the previous annual shipments support this view.’ In M Almgil Establishment v Malayan Motor and General Underwriters (Private) Ltd, The Al-Fubail IV,* where a vessel was insured for 12 months from and on a voyage from Singapore to the Persian Gulf and whilst trading within the Gulf, and was delayed at Colombo for 79 days whilst repairs were effected to her, the Singapore Court of Appeal® held that the delay was reasonable.°® Excuses for delay Delay in prosecuting the voyage contemplated by the policy is excused by the same reasons which justify a deviation. Effect of ‘transit’ clause It should be noted that the risk continues where the policy includes a transit clause even though there has been a delay. Thus, eg the ‘transit’ clause set out in the Institute Cargo Clauses (A)8 states: ‘This insurance shall remain in force . . . during delay beyond the control ofthe Assured . . .’ Duty to resume course Section 49(2) of the Marine Insurance Act 1906 states: ‘When the cause excusing the. . . delay ceases to operate, the ship must resume her course and prosecute her voyage, with reasonable despatch.’ 5 Termination clauses The risk may terminate earlier than in the general rule where in the case of goods there is a ‘termination of contract of carriage’ clause in the policy. Thus, clause 9 of the Institute Cargo Clauses (A)° states that if owing to circumstances beyond the control of the assured either the contract of carriage is terminated either at a port or place other than the destination named in it or the transit is terminated before delivery of the goods as provided in the ‘transit’ clause, the insurance is to cease, but may remain in force if prompt notice is given to the underwriters and the payment of an additional premium, if so required by them, is made. > (1922) 13 LIL Rep 75 at 76. See also the speech of Lord Atkinson, ibid, at 81 and that of Lord Sumner, ibid, at 82. [1982] 2 Lloyd’s Rep 637, Sing CA. Wee Chong Jin CJ, Lai Kew Chai and Chua JJ. See the judgment of Lai Kew ChaiJ: [1982] 2 Lloyd’s Rep at 641. Marine Insurance Act 1906, s 49(1). See pp 133-134, ante. These clauses are set out in Appendix III, pp 516-519, post. wo DN Mr These clauses are set out in Appendix ITI, pp 516-519, post. . Voyage policies 139 Further in the Institute War and Strikes Clauses (Hulls-Voyage)'° the insurance terminates under a ‘termination clause’ on the happening of any events specified in the Institute Time Clauses (Hulls-Time)'! eg i theoccurrence of any hostile detonation of any nuclear weapon of war; ii_ the outbreak of war between certain named countries. 10 These clauses are set out in Appendix III, pp 549-550, post. 'l See p 114, ante. CHAPTER 14 Marine risks The set of Institute Clauses to be attached to the policy will depend on whether the subject-matter in respect of which cover for marine risks is needed is the hull,! the freight? or the cargo.? All the clauses refer to the insurers’ liability for general average* and salvage.° Other risks may also be insured against.° A HULL CLAUSES The Institute Time Clauses (Hulls)’ and the Institute Voyage Clauses (Hulls) ® contain provisions setting out the extent of the cover in respect of: 1 1 the loss of or damage to the insured vessel;? 2 damage caused to another vessel;'° and 3 general average and salvage.’' LOSS OF OR DAMAGE TO INSURED VESSEL The Institute Time Clauses (Hulls)'? and the Institute Voyage (Hulls)'* each cover loss of or damage to the vessel caused by a anumber of perils irrespective of want of due diligence by the assured; b a number of perils where the assured is not guilty of want of due c diligence; and steps to mitigate a pollution hazard. See pp 140-177, ante. See p 177, post. See pp 177-182, post. See pp 182-192, post. See pp 192-194, post. + See pp 194-196, post. These clauses are set out in Appendix III, pp 533-540, post. FF DWN S2AIA =| WN These clauses are set out in Appendix III, pp 540-547, post. See pp 140-170, post. See pp 170-176, post. 'l See pp 176-194, post. '2 These clauses are set out in Appendix III, pp 533-540, post. "3 These clauses are set out in Appendix III, pp 540-547, post. ‘© 10 140 Clauses Loss of or damage to insured vessel (a) 141 Perils irrespective of want of due diligence . 1 covers loss of or The insurance’* damage to the vessel caused by 1 2 3 perils of the seas, rivers, lakes or other navigable waters; fire and explosion; violent theft by persons from outside the vessel; 4 jettison; 5 6 7 piracy; breakdown of or accident to nuclear installations or reactors; and contact with aircraft or similar objects, or objects falling therefrom, land conveyance, dock or harbour equipment or installation. Of the above perils some require special mention. Some of the reported cases, however, concern loss of or damage to cargo, yet the principles established by them apply equally to the loss of or damage to a ship. Perils of the sea A peril ofthe sea is a danger arising from the action of the sea which cannot be expressly guarded against, such as storms, or leakage of the ship, whether caused by agencies working from without or from within.!> To come within the meaning of the expression ‘perils of the seas’ the occurrences must not be such as can be foretold as, eg the gradual decay ofa ship’s timbers by the action of the water. Something fortuitous and unexpected is involved in the word ‘peril’ or ‘accident’.'® Similarly, Rule 7 of the Rules for Construction of Policy set out in the First Schedule to the Marine Insurance Act 1906 states: “The term “‘perils of the seas”’ refers only to fortuitous accidents or casualties of the sea. It does not include the ordinary action of the winds and waves.’'’ Hence, insurers are answerable for casualties arising from the violent action of the elements, as distinguished from the silent, natural, and the gradual action of the elements upon the vessel itself, which properly relate to wear and tear. They insure against casualties which might happen, and not consequences which must happen. In The Golden Fleece'*® Lush J, directed the jury that in the case before them the question was this: Was the leak on which the vessel foundered attributable to injury or violence from without or to weakness from within? For if it was not attributable to perils of the seas—ie to the violent action ofthe elements from without, or any other casualty involved in perils of the seas—the jury would come to no other conclusion than that it was due to an inherent infirmity in the ship herself. The dividing line has therefore to be drawn between that which is accidental, fortuitous, and unexpected, and that which is natural, ordinary, and usual in its nature, having regard to the particular circumstances. ' '4 See the Institute Time Clauses (Hulls), cl 6 (p 534, post), and the Institute Voyage Clauses (Hulls), cl 4 (p 541, post). 1S Hamilton Fraser & Co v Pandorf& Co (1887) 12 App Cas 518. "© Ibid. 17 See further, Marine Insurance Act 1906, s 3. 18 Cited by Blackburn J, in Dudgeon v Pembroke (1874) LR 9 QB 581. 19 Harrison v Unwersal Marine Insurance Co (1862) 3 F&F 190. 1 Wiavnene » Section 55(2)(c) of the Marine Insurance Act 1906 states: ‘Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils.’ A loss occasioned by the natural chemical action of salt water, as distinguished from alossby the violence of the waves, is not recoverable as a loss by perils of the seas;?° and leakage from casks is not a loss from sea perils unless the cargo has shifted in j a gale,’ in the absence of special terms in the policy.* Further, where, in the ordinary course of navigation, the ship takes the ground at low water, a straining of the ship is not a loss by sea perils, in the absence of any unusual circumstance.* Nor was it a loss by sea perils where a transport had been laid down on Gosport Beach to be cleansed and caulked in the ordinary way, and aus tide rose and knocked away the shoring, thereby causing her to fall over.* Where, however, a ship took ground at low water in harbour in the ordinary way, and the rising of the tide was accompanied by a heavy swell, which set into the harbour, causing the ship to strike the ground and damage herself, the damage was held to result from sea perils.° But, on the other hand, where the ship was destroyed by the action of worms on the timbers, this, being a thing which could not be said to be unexpected or accidental, was not a loss by sea perils.® A similar decision was reached where a vessel was detained at Antigua for a considerable time, and rats made holes in the bottom of the ship, so that she was condemned.’ Moreover the loss must be a peril of the sea in the sense that the sea or salt water must be the destroying agent. Thus, where cattle Bee injured by the rolling and pitching of the ship, the loss was one by sea perils;® and also where horses were injured in like manner in a storm.” But where the master took a wrong course, and so lengthened his voyage that fodder oe short and cattle were lost for lack of food, the loss was not one by sea perils;'° nor even where unfavourable winds lengthened the voyage and caused a loss of cattle for lack of food."! Where aca ee of cheese was damaged by rats, it was held not to be a peril of the seas;'? but damage to a cargo of rice, caused by theiincursion of water through holes made by rats, is a loss by perils of the seas.! Where a cargo of hides was rendered putrid by the shipping of large 2° Paterson v Harris (1861) 1 B&S 336. Crofts v Marshall (1836) 7 C&P 597. See eg Phoenix Insurance Co of Hartford v De Monchy (1928) 35 Com Cas 67. Magnus v Buttemer (1852) 11 CB 876. Thompson v Whitmore (1810) 3 Taunt 227. Fletcher v Inglis (1819) 2*B& Ald 315. Rohl v Parr (1796) 1 Esp 445. Hunter v Potts (1815) 4 Camp 203. Lawrence v Aberdein (1821) 5 B&Ald 107. Gabay v Lloyd (1825) 3 B&C 793. -° Gregson v Gilbert (1783) 3 Doug KB 232. 't Tatham v Hodgson (1796) 6 Term Rep 656. FF DWH OmrI 0= WN "2 Laveroni v Drury (1852) 8 Exch 166. "> Hamilton Fraser & Co v Pandorf& Co (1887) 12 App Cas 518... Loss of or damage to insured vessel 143 quantities of sea water, thereby imparting to a consignment of tobacco a nauseous flavour, it was held that the damage to the tobacco was caused by perils of the seas.'* Again, where ventilators had to be closed in bad weather and the accumulated hot air injured the cargo, the damage was held to be caused by an ‘accident of the sea’.’> In Canada Rice Mills Ltd v Union Marine and General Insurance Co Lid'® a floating policy in respect of shipments of rice as from time to time declared had been effected by the assured. The policy covered loss occasioned by (inter alia) perils of the sea ‘and all other perils losses and misfortunes that have or shall come to the hurt detriment or damage of the subject-matter ofthe insurance’. Rice was shipped on a vessel at Rangoon bound for the Fraser River. On arrival there it was found that the rice was overheated due to the closing of the ventilators and hatches in heavy seas to prevent the incursion of sea water. The assured claimed for a loss under the policy. The Judicial Committee of the Privy Council'’ held that the action succeeded because the damage, which was not caused by the incursion of sea water but by action to prevent incursion, was recoverable as a loss by perils of the sea. Lord Wright observed:'® “There remains the second question—namely, whether the damage which was caused, not by the incursion of sea water, but by action taken to prevent the incursion, is recoverable as a loss by perils of the seas. It is curious that, so far as their Lordships know, there is no express decision on this point under a policy of marine insurance, but, in their Lordship’s judgment, the question should be answered in the affirmative, as they think the jury did. The answer may be based on the view that, where the weather conditions so require, the closing of the ventilators is to be regarded, not as a separate or independent cause, interposed between the peril of the sea and the damage, but as being such a mere matter of routine seamanship necessitated by the peril that the damage can be regarded as the direct cause of the peril... . In cases of fire insurance, it has been said that loss caused from an apparently necessary and bona fide attempt to put out a fire by spoiling goods by water, and in other ways, is within the policy: per Kelly CB, in Stanley v Western Insurance Co.'° Their Lordships agree with this expression ofopinion, and accordingly are prepared to hold that the damage to the rice, which the jury have found to be due to action necessarily and reasonably taken to prevent the peril of the sea affecting the goods, is a loss due to a peril of the sea, and is recoverable as such.’ Where cargo was damaged by sea water negligently let in by the engineer through a tank valve, it was held to be a loss by perils of the sea.?° On the other hand, where a very long delay caused a cargo of meat to become putrid, the loss was said not to be a loss by sea perils, though the delay was caused by tempest.’ A loss by foundering, the result of a collision, is a loss by perils ofthe sea, for, as was pointed out by Lord Bramwell in Wilson, Sons & Co v Xantho (Cargo 14 Montoya v London Assurance (1851) 6 Exch 451. 1S The Thrunscoe [1897] P 301; Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55, [1940] 4 All ER 169, PC. © [1940] 4 All ER 169, PC. 17 Viscount Maugham, Lord Russell of Killowen, Lord Wright and Lord Porter. '8 [1940] 4 All ER 169 at 177. 19 (1868) LR 3 Exch 71 at 74. See further, Ivamy, Fire and Motor Insurance (4th edn, 1984), p 152. 20 Blackburn v Liverpool, Brazil and River Plate Steam Navigation Co [1902] 1 KB 290. Taylor v Dunbar (1869) LR 4 CP 206. 144 Marine risks Owners), The Xantho,* there can be no difference as to the cause of a loss which results from a hole in the ship, whether that hole be small or large, whether in the one case the hole be made by a plank starting, or whether the hole be caused by another ship. In each case it would be occasioned by a peril of the sea, and it can make no difference that one of the causes which led up to the loss was the negligence of some of the parties concerned. So the loss of, or damage to, a ship occasioned by the negligence of another ship colliding with her, is a loss by perils of the sea,* and so is the loss of a vessel owing to her being negligently towed into harbour.* On the other hand, where a shipowner is made liable by legal proceedings to pay damages for injuries done to another ship by the insured ship in a collision, such damages will not, as regards the insured ship, be a loss under her policy by perils of the sea.° Where goods were sold under a decree of the Admiralty Court in a salvage suit, and the proceeds were entirely swallowed up by the costs, it was held that this was not a loss by perils of the sea.® Again, it would seem that where a collision is brought about without waves or winds or difficulties of navigation contributing to the accident, the loss is not one by perils of the sea.’ The following are further examples of loss by perils of the sea: i ii iii Aship was taken in tow by a man-of-war, and, in order to keep up with her, had to carry an excess of canvas in a gale, and consequently she shipped a large quantity of water, which damaged her cargo.° A cargo had been negligently stowed, and the ship, becoming leaky, was beached to save her from sinking.? The capture of a cargo in a stranded ship.'° iv A loss occasioned by wreckers plundering the cargo.'’ v_ vi Where a ship had come into the control of a foreign power by sea perils, the charges levied on the cargo were recovered as a loss by perils of the sea.” Where two members ofa crew went ashore to cast offa rope, and were seized by the press gang before they had accomplished their duty, and ? (1887) 12 App Cas 503. > Smith v Scott (1811) 4 Taunt 126. * Mountain v Whittle [1921] 1 AC 615. > De Vaux v Salvador (1836) 4 Ad&El 420. See the ‘Collision Clause’, which is considered at pp 170-176, post. ° De Mattos v Saunders (1872) LR 7 CP 570. 7 Woodley v Michell (1883) 11 QBD 47. But as to this, see Wilson, Sons & Cov Xantho (Cargo Owners), The Xantho (1887) 12 App Cas 503, where it was laid down that the meaning ofthe term ‘perils of the sea’ in bills of lading and in policies of insurance was the same; but that whereas ina policy the causa proxima alone was to be regarded, in a bill of lading the Court would consider not merely the causa proxima, but also the causa sine qua non, in order to determine whether the shipowner had, by his conduct in relation to the causes as a whole, merited the benefit ofthe exception. Hagedorn v Whitmore (1816) 1 Stark 157. Redman v Wilson (1845) 14 M&W 10 Hahn v Corbett (1824) 2 Bing 205. @ o 476. ‘! Bondrett v Hentigg (1816) Holt NP 149. ‘2 Dent v Smith (1869) LR 4 QB 414. | Loss of or damage to insured vessel 145 in consequence the ship was driven ashore, the loss was held to be one by perils of the sea.'* Where a friendly ship was fired upon in mistake for an enemy’s ship, Lord Ellenborough CJ, intimated that the loss in such a case was not by perils of the seas, although, being ejyusdem generis, it came under the general words at the end of the perils clause. ‘Perils of the seas’ did not mean ‘perils on the seas’.'* But a loss arising from ignorance and want of skill is not a loss by a peril of the sea.'° Nor is a ship which is intentionally scuttled.'° In P Samuel & Co Ltd v Dumas'’ the House of Lords!® held by a majority’? that a loss of a vessel by scuttling was not a ‘peril of the sea’, for the term ‘peril of the sea’ referred only to fortuitous accidents and casualties. Consequently even an innocent mortgagee of a vessel, which was scuttled with the connivance of her owner, could not recover under a policy of insurance in respect of her. Viscount Cave observed :?° “Then, was the loss a loss by perils of the sea? Surely not. The term “‘perils of the seas” is defined in Sch | to the Act as referring only to “fortuitous accidents or casualties of the seas”. The word “accident” may be ambiguous, and has even been held in another connection to include a wilful murder: Trim Joint District School Board of Management v Kelly.' But the word “fortuitous”, which is at least as old as Thompson v Hopper,” involves an element of chance or ill luck which is absent where those in charge of a vessel deliberately throw her away. In Wilson, Sons & Cov Xantho (Cargo Owners),* Lord Herschell said that in order that there might be a peril of the seas “there must be somie casualty, something which could not be foreseen as one ofthe necessary incidents of the adventure. The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen”’. In Hamilton, Fraser & Cov Pandorf& Co,* Lord Bramwell approved the definition of Lopes LJ, “it is a sea damage occurring at sea and nobody’s fault”. In E D Sassoon & Co v Western Assurance Co,° Lord Mersey, in delivering the judgment of the Judicial Committee ofthe Privy Council, adopted a similar view, which is also to be found in the judgment of the Judicial Committee in Grant, Smith & Co and McDonnell Lid v Seattle Construction and Dry Dock Co.° On this view the expression “‘perils of the sea”, while it may well include a loss by accidental collision or negligent navigation, cannot extend to a wilful and deliberate throwing away of a ship by those in charge of her.’ In Lind v Mitchell’ a schooner was damaged by ice and started leaking. Her master caused her to be prematurely abandoned, and set her on fire to prevent her from being a danger to navigation. She was later sighted by another vessel 13° Hodgson v Malcolm (1806) 2 Bos& PNR 336. 14 Cullen v Butler (1816) 5 M&S 461; Thames and Mersey Marine Insurance Co Ltd v Hamilton Fraser & Co (1887) 12 App Cas 484. J). See Gregson v Gilbert (1783) 15 Tatham v Hodgson (1796) 6 Term Rep 656 at 659 (per Lawrence 3 Doug KB 232. 16 P Samuel & Co Ltd v Dumas [1924] AC 431, HL. 17 [1924] AC 431, HL. 18 Viscount Haldane LC, Viscount Cave, Viscount Finlay, Lord Sumner and Lord Parmoor. 19 Viscount Cave, Viscount Finlay and Lord Parmoor: Lord Sumner dissenting. 20 [1924] All ER Rep 66 at 76. See also the speech of Viscount Finlay, ibid, at 79. [1914] AC 667, HL. (1856) 6 E&B 172. (1887) 12 App Cas 503, HL. (1887) 12 App Cas 518, HL. [1912] AC 561, PC. [1920] AC 162, PC. YN FP OW WN [1928] 32 LIL Rep 70, CA. 146 Marine risks . which approached her and found her on fire, but floating high in the water. She was never seen again. One of the issues which arose in the case was whether she had been wilfully cast away by the master. The Court of Appeal® held that there was no evidence pointing to this, and that she had been lost by a peril of the seas. Scrutton LJ, observed:? ‘Having read the evidence carefully, I can find no evidence on which a jury would be entitled to convict the master in this case ofwilfullyand deliberately abandoning the ship not from any consideration ofthe existing danger from her leaks but simply because he wanted to get rid of her. One ofthe matters which influences me in that decision is the complete absence of motive of the master. In all the scuttling cases one has been able to prove a distinct advantage to the assured from the vessel being cast away, heavy over-insurance, impecuniosity of the assured, and matters like that. In this case it is not alleged that the assured or the managing owner are guilty of misconduct or have given any instructions for misconduct. The master is not insured; the master will get nothing by the vessel going to the bottom, except that he will lose his employment. I entirely fail to see any evidence on which you can find that the abandonment of the ship was wilful casting away by the master.’ In Cohen, Sons & Co v National Benefit Assurance Co Ltd‘° a policy in the usual Lloyd’s form’? was taken out in respect of the German submarine U1 24 ‘from Southampton to Swansea and for four months while breaking up covering all and every risk’. She was taken from Southampton to Swansea. While the work of breaking up was going on, she sank in a dock.’ The assured were called upon by the insurers to raise her and commenced operations. After spending £2,000 they refused to continue them, and claimed an indemnity from the insurers in respect of this sum. But the insurers repudiated liability on the ground that her sinking was not due to a peril insured against, but was due to want of care by those who were dismantling her. Bailhache J, held that the claim succeeded, for the loss was due to a peril of the sea, and observed:*? ‘In my view, the unintentional admission of sea water into a ship, whereby the ship sinks, is a peril of the sea. There is no warranty in this policy against negligence; there is no exception of negligence; and the fact that the unintentional admission of water into the ship is due to negligence is, in my opinion, totally and absolutely immaterial. There is a peril of the sea whenever a ship is afloat in the sea, and water from the sea is unintentionally admitted into her which causes a loss, either to the cargo or to the ship.’ He also considered that the words of the policy ‘all and every risk’ were sufficiently wide to cover the negligence of the workmen, and said:** ‘Suppose I turn away from the construction of this as a marine peril and construe the words “covering all and every risk” as being words to be construed in their full signification without being qualified at all by the printed words of the policy. One of the ordinary risks of dismantling a ship is that somebody or other on board may be negligent; and in my opinion that is exactly what the [insurers] have proved in this case. There was negligence by somebody which caused this water to come into the ship and caused the damage. I have no doubt at all that if the words are not to be qualified by the printed words ofthe policy, ‘““Southampton to 8 Scrutton, Lawrence and Sankey LJJ. ° (1928) 32 LIL Rep at 74. 10 (1924) 18 LIL Rep 199, KBD. '! It was not a Lloyd’s but an insurance company’s policy. '2 The circumstances of the sinking are set out (1924) 18 LIL Rep 199 at 201. '3 Tbid, at 202. ‘4 Tbid, at 202. Loss of or damage to insured vessel 147 Swansea, and for four months while breaking up, covering all and every risk” undoubtedly covers the negligence of the workmen. [Counsel] has pointed to the fact—which he seems to think is in his favour—that these people had broken up a great many submarines without anything ofthis sort having happened at all; that being urged as something to support his case as showing, as I understand it, that this was one ofthe almost inevitable risks of breaking up a ship. To my mind it shows exactly the opposite thing. The fact that they had broken up 18 or 19 ships without risk shows that this was not an accident which must inevitably have happened, but a risk which does not happen unless somebody is negligent. I find that is a fact, because [the insurers’] witnesses conclusively proved that fact.’ In Miceli v Union Marine and General Insurance Co Ltd'* a cargo of wet salted and dried codfish’® was insured for a voyage from the Faroe Islands to Naples. Heavy weather was experienced in the Bay and in the Gulf of Lions. The cargo arrived in a damaged condition. The assured claimed for a loss by perils of the sea, but the Court of Appeal'” held that the action failed because he had not creed the burden of showing that the damage had been caused by sea water.! In the course of his speech in Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd‘? Lord Wright alluded to the meaning to be given to the words, and said that the incursion of sea water through the ventilators and hatches ofa vessel fell within their ambit. He observed :*° ‘The jury may have pictured the tramp motor vessel, heavily laden with 5,000 tons of rice, driving into the heavy head seas, pitching and rolling tremendously and swept by seas or spray. Their Lordships do not think that it can properly be said that there was no evidence to justify their finding. On any voyage, a ship may, though she need not necessarily, encounter a storm, and a storm is a normal incident on such a passage as the Segundo was making, but, if, in consequence ofthe storm, cargo is damaged by the incursion ofthe sea, it would be for the jury to say whether or not the damage was due to a peril of the sea. They are entitled to take a broad commonsense view of the whole position. . . . Storms at sea may be frequent, in some cases seasonal, like typhoons in the China seas. A ship may escape them, and they are outside the ordinary accidents of wind and sea. They may happen on the voyage, but it cannot be said that they must happen. In their Lordships’ judgment, it cannot be predicated that, where damage is caused by a storm, even though its incidence or force is not exceptional a finding of loss by perils may not be justified.’ The term ‘perils of the sea’ does not cover damage by seawater entering a vessel through holes in her caused by natural decay.’ A cargo of opium was stored in a wooden hulk moored in the River Huang-Pu at Shanghai, and was insured against ‘perils of the sea’. The hulk became leaky due to the natural decay ofher hull. Water from the river found its way into her and damaged the opium. The assured claimed that the damage was caused by a ‘peril ofthe seas’. The Judicial Committee of the Privy Council’ held that the loss was not caused by a ‘peril of the seas’, and that the action failed. 'S (1938) 60 LiL Rep 275, CA. ‘© The meaning of these terms is explained ibid, at 275. '7 Sir Wilfred Greene MR, Scott and Mackinnon LJJ. 18 The evidence is set out at (1938) 60 LIL Rep 275 at 276-278. 9 [1940] 4 All ER 169, PC. 20M ibidwatel77 ! ED Sassoon & Cov Western Assurance Co [1912] AC 561, PC. See also, Sipowicz v Wimble, The Green Lion [1974] 1} Lloyd’s Rep 593 (District Court of Southern District of New York), where the loss of the vessel was held not to be caused by a ‘peril of the seas’ but was due to the water entering her because of the bad condition of the metal fastenings securing the keel to the rest ofthe hull. (See the judgment of Cannella DJ, ibid, at 598.) 2 Lord Macnaghten, Lord Atkinson, Lord Shaw and Lord Mersey. 148 Marine risks Lord Mersey observed :* ‘The learned judge held that the damage was not due to a sea peril at all, but was solely due to the weakness of the hulk, and he thereupon dismissed the action. Their Lordships are of opinion that the learned Judge was right. There was no weather, nor any other fortuitous circumstance, contributing to the incursion of the water; the water merely gravitated by its own weight through the opening in the decayed wood and so damaged the opium. It would be an abuse of language to describe this as a loss due to perils of the sea. Although sea water damaged the goods, no peril of the sea contributed either proximately or remotely to the loss.’ In Cobb and Jenkins v Volga Insurance Co Ltd of Petrograd* a policy had been effected in respect of some woollen goods during transit from London to Hull and then to Petrograd. Perils of the sea were included in the risks insured against. On arrival at Petrograd it was found that some of the goods had been damaged by water, but the Lloyd’s surveyor, who inspected them, did not state whether the damage had been caused by salt water or fresh water. The goods had been shipped at Hull and had reached Trondhjem undamaged. They had been sent by rail from Trondhjem to Lulea. There they were put on board a vessel and carried across the Gulf of Bothnia to Uleaborg. They were sent on from there by rail to Tornea, where they remained for 4 months. They were then taken in sledges across a frozen river and carried by rail to Petrograd. The assured claimed for a loss under the policy on the ground that the damage had been caused by perils of the sea, ie sea water, because from the time that the goods arrived at Uleaborg until they reached Petrograd, the temperature was below freezing point so that no moisture could have reached them. GreerJ,held that the claim failed because the assured had not shown that the loss had been caused by perils of the sea.” He concluded his judgment by saying:° ‘Apparently they managed to get accommodation on the railway before the thaw. If so, they must have been taken across the river in sledges or carried across. If so, they were never waterborne and had no chance offalling into the water. In these circumstances, it is impossible for me to hold that they did, and I am satisfied that they did not, suffer from any sea perils while at Tornea. Mr Guisberg’s evidence is not confirmed by an expert opinion in Petrograd, and it may be that there are no experts left in Petrograd. I am not satisfied that Mr Guisberg is right when he says that he could determine definitely by looking at the goods that they were damaged by salt water. I think it is quite possible and just as likely as not that the damage he saw was damage by fresh water, for which the insurers would not be responsible. On the whole, I am not satisfied that the damage happened from a peril insured against. It is an unfortunate mystery, and it will remain a mystery for the rest of time how the damage happened.’ In Mountain v Whittle’ a houseboat was insured under a time policy against, inter alia, perils of the sea. The assured wished to have her cleaned, so he arranged for her to be towed to a convenient yard 7 miles away. The tug which was employed was larger than was usual for this type of operation, and caused an unusually high breast wave, which entered the vessel and caused her to sink. The House of Lords® held that the loss was caused by a peril of the seas, and that the assured was entitled to recover under the policy. > [1911-13] All ER Rep 430 at 439. * (1920) 4 LIL Rep 130 at 178, KBD. ° The evidence is set out ibid, at 178. ©? Tbid, at 178. [1921] 1 AC 615, HL. Other aspects of the case related to the construction of‘liberty to shift clause’ and a ‘docking clause’. See pp 268-269, post. a Lord Birkenhead LC, Viscount Haldane, Viscount Finlay, Viscount Cave, and Lord Sumner. Loss of or damage to insured vessel 149 Lord Birkenhead LC, said:? ‘In my opinion, the nature of this wave constituted a ‘sea peril’. The elements which are necessary to form a sea peril have frequently been collected and explained in this House. But it is no longer necessary, unless for the purposes of illustration, to go further than the statutory provisions of the Marine Insurance Act 1906, that the term “‘perils of the seas’’ refers only to fortuitous accidents or casualties of the seas, and does not include the ordinary action of winds or waves. In my opinion, the incidence and dimensions of the wave in question amounted to a fortuitous casualty of the seas and were not accounted for merely by the ordinary action of winds or waves.’ Viscount Finlay observed:'° ‘If the water was in a normal condition and got into the houseboat simply owing to the defective character of the seams, there would be no loss by peril of the seas—the loss would have been by the defective condition ofthe vessel. A loss caused by the entrance of sea water is not necessarily a loss by perils of the seas. There must be some special circumstance, such as heavy waves causing the entrance ofthe sea water, to make it a peril of the seas. Was there such a peril here? Both Bailhache J, and the Court of Appeal find that there was, and upon the evidence I cannot doubt that they were right. It seems to be quite clear that the Dorothy was exposed to a wash of an extraordinary character from the great size and power of the Dorrington, the tug to which she was lashed. The breast wave so occasioned amounted to a peril of the seas just as much as if it had been occasioned by a high wind. No attempt was made on behalf of the underwriters to show that the water would have made its way into the houseboat to the same extent if the wash and breast wave had been normal. The wash occasioned by passing vessels at sea may constitute a peril ofthe seas if ofan extraordinary character, and if the wash here was occasioned by something abnormal in the strength and size ofthe tug or the mode of towage, it was equally a peril of the sea.’ Damage caused by rough weather may be a ‘peril of the sea’ if the cargo has been properly stowed, even if such weather is expected."! InN E Neter & Cov Licenses and General Insurance Co Ltd‘? a cargo of china clay was insured for a voyage from Fowey to Bombay. The assured alleged that a large part ofthe clay was found on arrival at Bombay to have been stained due to rough weather in the Bay of Biscay causing some casks of dye-stuff stowed with the clay to be stoved in. The King’s Bench Division held that the assured had not discharged the burden of proving that the proximate cause of the damage to the cargo was the rough weather, but that the damage caused by rough weather would have been a peril of the sea, even though such weather was expected, provided that the cargo had been properly stowed. Tucker J, said:'* ‘I think it is clearly erroneous to say that, because the weather was such as might reasonably be anticipated, there can be no peril of the seas. There must, of course, be some element of the fortuitous or unexpected to be found somewhere in the facts and circumstances causing the loss, and I think such an element exists when you find that properly stowed casks, in good condition when loaded, have become stoved in as a result of the straining and labouring of a ship in heavy weather. It is not the weather by itself that is fortuitous; it is the stoving in due to the weather, which is something beyond the ordinary wear and tear of the voyage. This appears to me to be “something which could not be foreseen as one of the necessary incidents of ce) the adventure”’. It was “‘an accident which might happen, not an event which must happen”. 9 [1921] All ER Rep 626 at 629. '0 Tbid, at 632. See also the speech of Lord Sumner, ibid, at 634. 11 NE Neter & Co v Licenses and General Insurance Co Ltd [1944] 1 All ER 341, KBD. 12 [1944] 1 All ER 341, KBD. 13 Tbid, at 343. 150 M we risks Although the phrase ‘perils of the seas’ has the same meaning in a bill of lading, charter-party, or policy of insurance,'* it would seem that the risk of pirates would not now be included under the words ‘perils of the sea’—at all events, not in a policy of insurance, it being rather a peril on the sea.'° Where a yacht was insured under a time policy in respect of loss and damage ‘directly caused by external accidental means’, and she was damaged in the course of avoyage from Deauville to Hamble in a confused sea with the wind of about Force 4 and waves 3 metres high, it was held that the insurers were liable, for there was no material distinction between ‘external accidental means’ and ‘perils of the sea’, and the assured had proved that she was damaged in that way.'° Fire The term ‘fire’ needs no definition; but the extent of its application to policies of marine insurance is not so clear. Amongst the earliest references to fire as a cause of danger to the ship is that of Malynes: ‘It hath oftentimes happened that by a candle unadvisably used by the boys or otherwise before the ships were unladen they have been set on fire and burnt to the very keel with all the goods in them, and the assurers have paid the sums of money by them assured.’ The earliest reported case on the subject is Gordon v Rimmington.'’ In this case the ‘Reliance’ was burnt off the coast of Africa in 1804 by her captain and crew to prevent her falling into the hands of an enemy privateer. Lord Ellenborough CJ, in his judgment gave some examples of the various grounds upon which the assured might be entitled to recover under this head:'8 ‘Fire is expressly mentioned in the policy as one ofthe perils against which the underwriters undertake to indemnify the assured, and if the ship is destroyed by fire, it is ofnoconsequence whether this is occasioned by a common accident or by lightning or by an act done in duty to the State. Nor can it make any difference whether the ship is thus destroyed by third persons, subjects of the King, or by the captain and crew acting with loyalty and good faith; fire is still the causa causans and the loss is covered by the policy.’ In Busk v Royal Exchange Assurance'? the ‘Carolina’ was frozen up for the winter in a Russian port and, according to the custom of the country, the crew were paid off. The ship was left in charge of the mate who lit a fire in his cabin, but negligently omitted to see that it was extinguished before he went to bed. The ship was set on fire and burnt to the water’s edge. It was held that the mere negligence of the mate was not a ground for relieving the insurers, for, although the fire was due to negligence, the loss was caused by fire. Again, in Rosa v Insurance Co of the State of Pennsylvania: The Belle of\Portugal,*°® where a vessel was lost by fire, which was one of the perils insured against, and ‘4 Hamilton Fraser & Co v Pandorf& Co (1887) 12 App Cas 518. 'S Cf the judgment of Byles J, in Russell v Niemann (1864) 34 LJCP 10 at 14 and that of Lord Ellenborough CJ, in Cullen v Butler (1816) 5 M&S 461. See further, Hamilton Fraser & Co v Pandorf& Co, supra, where Lord Esher (at 475) defined perils ofthe sea as ‘perils to which people who carry on their business on that dangerous element are liable because they carry on their business on the sea. They are perils ofthe sea, not the perils of journeying.’ See also De Rothschild 16 v Royal Mail Steam Packet Co (1852) 21 LJ Ex 273; Wilson, Sons & Cov Xantho (Cargo Owners), The Xantho (1887) 12 App Cas 503; Samuel v Dumas, supra. JF Ff Lloyd Instruments Ltd v Northern Star Insurance Co Ltd, The Miss Jay Jay [1985] 1 Lloyd’s Rep 264, QBD (Com Ct). See the judgment of MustillJ, ibid, at p 272. '7 (1807) 1 Camp 123. 18 Ibid, at 123. "9 (1818) 2 B&Ald 73. Loss of or damage to insured vessel 151 the fire was caused by the negligence of a shore-side electrician, the United States Court of Appeals, Ninth Circuit,” held that the assured was entitled to recover under the policy.’ Butalthough negligence will not excuse the insurer, yet if the fire is caused by the thing insured, he will succeed upon the ground that the has himself occasioned the loss by having the goods in that condition, eg if spontaneous combustion took place inacargo ofhemp owing toits having been put on board ina damaged condition, the insurer would escape liability.? ys he be liable where coals were lost by spontaneous Theft The term ‘pirates’ presents no difficulty in regard to its use in mdrine policies, but the same observation is not applicable to the term ‘thieves’. In the Florentine policy of 1523 the words employed are ‘Robberies of Friends and Foes’. In the policy in Goram v Sweeting* the terms employed are ‘Pirates, Rovers, Thieves’, while in some American policies the words used are ‘Pirates, Robbers or Rovers, and Thieves’.* In each ofthe above policies the insurer was liable for a loss by barratry. There is an historical connection between barratry and simple theft, arising from the fact that neither was regarded as being a casus fortuitus, and therefore, apart from express words, the insurer would not be liable for a loss under either head. Accordingly, where the insurer was liable for barratry, he might reasonably be expected to be liable for a loss by theft. So Magens, in the marginal note to the section ofhis essay which treats of barratry,° says that the insurers must pay for the faults and thefts of the master and crew. On the other hand, Malynes dealing with losses by ‘Pirates, Rovers, Thieves’ says: ‘The losses which ordinarily according to the season of the year happen upon the seas are unknown; the like is more or less, with men of war, Enemies, Pirats, Rovers, Theevs, especially with men of war in times of hostility, as it is in time of peace by Pirats, Rovers, and Theevs which are assailing theevs; for otherwise if there be theevs on shipboard within themselves, the master ofthe ship is to answer for that, and to make it good, so that the assurers are not charged with any such loss; which sometimes is not observed.’ Malynes thus limits the loss by theft to the case of‘assailing theevs’, but Park’ says that a loss by thieves from without is undoubtedly recoverable, and he questions the soundness of the limitation by Malynes to a loss from ‘assailing theevs’, pointing out that there is a non sequitur in Malynes’s reasoning that because the shipowner is liable for a loss by simple theft, therefore the policy does not cover it. Park says: ‘To be sure, it is not a necessary consequence, that because the owner is liable in such a case, therefore, the insurer, if an insurance has been made, must be discharged.’® 0 11970] 2 Lloyd’s Rep 386. 21 Merrill and Ely Ct JJ, and Crocker DJ. _ See the judgment of Merrill Ct J: [1970] 2 Lloyd’s Rep 386 at 387. Boyd v Dubois (1811) 3 Camp 133. Pirie & Co v Middle Dock Co (1881) 44 LT 426. (1670) 2 Saund 200. Phillips s 1106. Section 63. Park on Insurance, p 28. KHDnwnW oriu8 wWHN & Ibid, p 27. 152 M wie risks Indeed, Malynes himself says that the rule is not always observed. Phillips? is of opinion that a loss by simple larceny is covered by the word ‘thieves’, and says: ‘Where the policy is against “thieves” simply, the provision is too explicit and definite to admit of the exclusion of all simple larceny, since it would cancel this provision, since larceny by violence is insured against as robbery.’ Roccus,'° however, in dealing with the liability under Neapolitan law for losses of this kind, says that it depends upon the kind of theft, and he enumerates three kinds: 1 2 3 Theft by Pirates and Robbers—‘Furtum committatur in mani per pyratas et latrones’; such a loss was recoverable in Naples because it was a casus fortuitus. The second incidence is of theft committed on board the ship, and he proceeds to say that the underwriter is not liable for theft on board, because either the master of the ship or the owner of the goods is responsible for the safe custody of the thing stolen, and it is a loss from negligence and not a casus fortuitus and for the same reason the underwriter was not liable in Naples for a loss by barratry. The third instance is that of theft committed by land thieves while the ship is in port, and for this form of loss the underwriter is not liable, since an insurance against shipwreck, enemies, and pirates will not cover such a loss, and he will not be responsible for such a loss unless he has specially made himself liable for it. Thus far the authorities cited, with the possible exception of Malynes, would seem to be at least logical in their view ofthe subject, Roccus, on the one hand, classing a loss by theft with a loss by barratry, and pronouncing against the insurer’s liability, while Magens, Park, and Phillips, discussing a system of insurance in which barratry is a loss insured against and in which mere negligence does not affect the liability of the insurers, declare that a loss by thieves covers a loss by theft. English writers, purporting to follow Malynes, have, however, assigned to the term ‘thieves’ a meaning which renders the employment ofthat word in the policy useless and unnecessary. It is said that the word denotes persons, not members of the crew, who commit robbery with violence; that it does not cover a loss by simple theft, but only refers to latrocinium, as distinguished from furtum. This view is adopted by Rule 9 of the Rules for Construction ofPolicy in the First Schedule to the Marine Insurance Act 1906: “The term “thieves” does not cover clandestine theft or a theft committed by any one of the ship’s company whether crew or passengers.’ In La Fabrique de Produits Chimiques SA v F N Large’* two cases ofvanillin and one case of caffeine were insured ‘at and from London to Brugg (in Switzerland)’. The policy contained a ‘warehouse to warehouse’ clause. *“The ° Phillips, Insurance, p 650. 10 De Assec, not 41-43. '! (1922) 13 LIL Rep 269, KBD. The case also concerned the point whether there had been a partial loss of the goods or a total loss of part of them. As to this, see pp 431-432, post. See further, Taylor v Liverpool and Great Western Steam Co (1874) LR 9 QB 546; and Steinman & Co v Angier Line [1891] 1 QB 619. ‘2 Now known as the ‘transit’ clause. See pp 122-126, ante. Loss of or damage to insured vessel 153 two cases of vanillin were stolen from the warehouse of the forwarding agents, who had arranged for them to be put on board a vessel bound for Bordeaux, at night whilst she was unattended. One ofthe defences to the claim made by the insured was that this did not constitute ‘theft’ in marine insurance as no violence had been used. ° Bailhache J, held that, without deciding whether in a ‘warehouse to warehouse’ policy the word ‘theft’ ought to be limited to theft by violence in the same way as it was in a purely marine policy, there had clearly been a theft by violence. Two sets of doors had been smashed by crowbars.'* Further, theft by violence did not necessarily involve an assault on some person or other. His Lordship observed :'* 4 ‘I am reminded that the risk of thieves in a policy of marine insurance does not cover the ordinary clandestine theft, but only theft accompanied by violence, and that certainly is so when the policy is a policy of marine insurance pure and simple; and it is said that the same rule must apply when it is a “warehouse to warehouse”’ policy as when it is a marine policy, because ofclause 5 of the Institute Gargo Clauses annexed to the policy; and it is said that the risk of thieves in a ‘warehouse to warehouse’ policy must have the same construction as in a marine insurance policy, as there was no violence in a case like this, where the goods were left unattended by night. I am not sure that in a “‘warehouse to warehouse”’ policy the word “‘theft’? ought to be limited to theft by violence in the same way as it is in a purely marine policy. However that may be, this was clearly a theft by violence. There was a smashing of two sets of doors by crowbars, and it seems to me that clearly was a theft by violence. I do not think by violence there must be an assault on some person or other. It seems to me that when a person comes along and by crowbars smashes in doors, he breaks in and steals by violence, and the facts of this case answer the description ofa theft by violence.’ Jettison Jettison is the voluntary sacrifice in time of peril of something in or upon the ship, by throwing it overboard, with the intention of preserving the ship and cargo. So, where the captain threw overboard a quantity of dollars to prevent them falling into the hands of the enemy, who was pressing him and subsequently captured his ship, the loss was held to be byjettison.’® Where the jettison is rendered necessary by an inherent vice, and not by the perils insured against, the insurer is not liable.*’ It would seem that if the jettison be in factjustifiable, it is not necessary that rd should have been made by the order of the master, for any person performing the act would be deemed to be the agent of the owner for that purpose.'® The insurance against jettison is independent of any right to general average contribution, though the insurer, after payment ofthe loss, would be entitled to such rights as the assured possessed. *® fsGoods carried on deck are not protected against loss byjettison unless it is the c ustom so to carry them or unless specifically insured as such. 13 As to the evidence, see (1922) 13 LIL Rep 269. 4 Tbid, at 269. 1S The Gratitudine (1801) 3 Ch Rob 240. 16 Butler v Wildman (1820) 3 B& Ald 398. '7 Taylor v Dunbar (1869) LR 4 CP 206. 18 Mouse’s Case (1608) 12 Co Rep 63. Cf Price v Noble (1811) 4 Taunt 123. 19 Dickenson v Jardine (1868) LR 3 CP 639. | Se Wharieceees The reason for this is that Rule 17 of the Rules for Construction of Policy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘In the absence of any usage to the contrary deck cargo . . . must be insured specifically, and not under the general denomination of goods.’ If, however, the cargo is usually loaded on deck, then the insurer ne liability for the loss of itwhen occasioned by any ofthe perils insured against;? and it seems ne the rule against deck AE oe does not extend to inland river voyages at all.’ Where cotton was carried on deck Hos ci to the custom of the trade, the witnesses who proved the custom also proved that the shipowner so shipped it at his own risk and not at cargo-owner’s risk. In order therefore to recover under the policy, such a risk would have to be specially insured, and would not be recoverable under the general term ‘jettison’. Where a deck cargo was carried at merchant’s risk, and a stipulation so to carry it was contained in a charter-party, and part of the deck cargo was properly jettisoned, it was held that, although the cargo so carried on deck was at merchant’s risk, yet that did not relieve the shipowners, who by a charterparty permitted it to be so carried, from a claim for contribution in respect of the jettisoned cargo. The cargo being timber from the Baltic, tt was phaved to be customary for such ships to carry a deck-load of timber.* In a case arising out of the carriage of a cargo of cattle, there was no evidence given of any custom allowing cattle to be carried on deck. But the contract for carriage stipulated that part of the upper deck was to be used for the purpose of carrying cattle, ‘Vessel not to be responsible for mortality or accident of any kind’. The bill of lading provided that the cattle should be delivered in good order and condition, danger of the seas only excepted, and there was also a marginal note, ‘Not accountable for mortality or any accident or injury of any kind or nature whatsoever’. The whole of the cattle were rightly jettisoned, but it was held that there was no liability on any other interest to contribute to the loss: first, because the cargo owners were not consenting parties to the loading on deck, and, there being no custom to bind them, the deck-load would not be a lawful deck-cargo; and, secondly, the ship being a general ship, there was no express liability on the shipowner in respect of the cargo, nor could any liability be implied, because that would import the principle of general average restricted in its application to the shipowner only. Piracy Pirates are persons who without legal commission for the purpose plunder other vessels indiscriminately on the high seas for their own ends. Thus, in Bolivia Republic v Indemnity Mutual Marine Assurance Co Lid> a cargo being carried on a vessel up the Amazon was insured under a policy by which the insurance company agreed to indemnify the assured against loss arising ° Da Costa v Edmunds (1815) 4 Camp 142; Gould v Oliver (1837) 4 Bing NC 134; Milward v Hibbert (1842) 3 QB 120; British and Foreign Marine Insurance Co v Gaunt [1921] 2 AC 41. Apollinaris Co v Nord Deutsche Insurance Co [1904] 1 KB 252. Royal Exchange Shipping Co v Dixon (1886) 12 App Cas 11. Burton v English (1883) 12 QBD 218; Johnson v Chapman (1865) 19 CBNS 563. Wright v Marwood (1881) 7 QBD 62. Cf Diederichsen v Farquharson Bros [1898] 1 QB 150. [1909] 1 KB 785. wr WN Loss of or damage to insured vessel 155 from various perils including piracy. The cargo consisted of stores and provisions, which were being sent up river by the Bolivian Government to their troops in the neighbourhood of El Acre, who were there for the purpose of resisting an organised expedition seeking to overthrow the Government. The vessel was intercepted by the expedition, and the cargo was seized. The assured claimed an indemnity under the policy on the ground that the loss had been caused by ‘piracy’. The Court of Appeal® held that the action failed. ‘Pirates’ were persons who plundered indiscriminately for their own ends. The expedition consisted of persons who were simply operating against the property of the Government for a public end. Vaughan Williams LJ, said:’ / ‘The first one cited, which is from Molloy (book 1, chap 4, s 1) is ‘‘a sea thief, a hostis humani generis, who, to enrich himself either by surprise or open force, sets upon merchants or other traders by sea’”’. A writer with whom I confess I am not acquainted, Riquelme, is cited in the same note, and he says that a pirate is a person who is preying by force contra los buques de todos los pueblos. And Ortolan, cited in the same note, says he is a man who is pillaging by arms les navires de toutes les nations. Those two definitions (I have not read the whole of them) seem to be either taken from the same source, or the one copied from the other, and there are other definitions which embody the same idea. No doubt there are definitions which do not embody that idea, but that, I think, is the common and ordinary meaning—to adopt the words of Pickford J: “... a man who is plundering indiscriminately for his own ends and not a man who is simply operating against the property ofa particular State for a public end, the end of establishing a government, although that act may be illegal, although that act may be criminal, and although he may not be acting on behalf of a society which is, to use the expression in Hall on International Law, politically organised. It may be piracy within the meaning ofthe doctrines ofinternational law, but, in my opinion, it is not piracy within the meaning of a policy of insurance, because, as I have already said, I think you have to attach to ‘piracy’ a popular or business meaning, and I do not think, therefore, that this was a loss by piracy. There is another passage in Hall on International Law (Sth edn), at p 262, which throws some light upon the matter; that is speaking of ‘Depredations committed at sea upon the public or private vessels of a State, or descents upon its territory from the sea by persons not acting under the authority of any politically organised community, notwithstanding that the objects of the persons so acting may be professedly political,’ and he says such acts as those are, within the meaning ofinternational law, piratical. But he goes on to say this: ‘Sometimes they are wholly political in their objects, and are directed solely against a particular State, with careful avoidance of depredation or attack upon the persons or property ofthe subjects of other States. In such cases, though the acts done are piratical with reference to the State attacked, they are for practical purposes not piratical with reference to other States, because they neither interfere with nor menace the safety of those States nor the general good order of the seas. It will be seen presently that the difference between piracy of this kind and piracy in its coarser forms has a bearing upon usage with respect to the exercise of jurisdiction.’ I think the meaning of‘piracy’ ina policy of insurance is what is called in this book piracy in its coarser sense, and, therefore, I do not think this is a loss by piracy within the meaning of this policy.” I adopt the statement of Pickford J’s, as the basis of my judgment.’ Rule 8 of the Rules for Construction of Policy set out in the First Schedule to the Marine Insurance Act 1906 states: ‘The term “‘pirates” includes passengers who mutiny and rioters who attack the ship from the shore.’ © Vaughan Williams, Farwell and Kennedy LJJ. 7 [1908-10] All ER Rep 260 at 264. 156 Marine risks The meal of a ship who mutiny, and seize her and then carry her off, LG pirates, * though iin such a case the loss might also be ascribed to barratry.” So the seizure of a ship by a body of emigrants is piratical, and the insurers would Pe liable under the word ‘pirates’ if the policy contained no fc and s clause.* The carrying away of a ship by coolie emigrants, who had mutinied and murdered the master and some of the crew, is an act of piracy, and the loss is covered by the word eee a In Nesbitt v Lushington'? Lord Kenyon CJ, held that a mob, who boarded the ship and plundered her, were pirates within the meaning ofthe policy. But in Bondrett v Hentigg'* plundering by wreckers was said to be a loss by perils of the seas. In Banque Monetaca and Carystuiaki v Motor Union Insurance Co Lid‘* a Greek motor schooner was insured under a policy against war risks, ie capture, seizure or arrest and the consequences thereof whether before or seer a declaration of war. The policy, however, excluded loss by piracy. The insured vessel called at Kerasounde (a port in the Black Sea on the coast of Turkey) in June 1920, when a state of war existed between Greece and Turkey. She was seized by Osman Agha, a brigand, who controlled the town, and was never heard of again. No prize court proceedings had been taken. The assured claimed for a total loss by the perils insured against, but the insurers refused to indemnify them on the ground that the vessel had been lost as a result of * piracy’. RocheJ, held that the loss was due to capture and seizure by an enemy,'° and not due to a raid by brigands, and observed:'® ‘I am satisfied, so far as I have the evidence, that in this case there was a loss from seizure and not from piracy. My reasons are as follows: There is no doubt that the person mentioned in the allegations, Osman Agha, was, by common consent, a person of low character, and that he was and had been a brigand. At the time, however, it is established upon evidence, upon which I ought to act, that he had arrived—as even a brigand might do—at a position ofconsiderable authority, and that he was virtually controlling, as dictator, the region in which this seizure took place... . Of course, capture or seizure among civilised people is always identified with the form of taking the ship seized before the Prize Court. Osman Agha or the Kemalists did not indulge in that form, but the absence of the legal form does not seem to me to alter the substance of the matter, which is that this purported to be a seizure and capture of an enemy vessel rather than a raid by brigands upon such vessel.’ In Rickards v Forestal Land, Timber and Rlys Co Ltd‘’ shortly before the outbreak of the Second World War a master of a German vessel was ordered to seek a neutral port or to return to Germany or as a last resort to scuttle her. War broke out and the vessel sailed from Rio for Germany and scuttled herself off the Faroe Islands to avoid capture by a British warship, and the insured cargo was 8 Brown v Smith (1813) 1 Dow 349. ° Dixon v Reid (1822) 5 B& Ald 597. ‘© Kleinwort v Shepard (1859) 1 E&E 447. Palmer v Naylor (1854) 10.Exch 282. ‘2 (1792) 4 Term Rep 783. "> (1816) Holt NP 149. '* (1923) 14 LIL Rep 48, KBD. As to the evidence, see ibid, pp 48-51. Ibid, at 50. His Lordship adopted (ibid, at 49) the definition of ‘piracy’ given by Pickford J, in Balitia Republic v Indemnity Mutual Marine Assurance Co Ltd [1909] 1 KB 785 at 791. The decision ~ in that case was later affirmed by the Court of Appeal: [1909] 1 KB 785 at 796. 7 [1941] 3 All ER 62, HL. Loss of or damage to insured vessel 157 lost. The House of Lords'® held that the loss of the cargo could not be regarded as caused by piracy, because the master’s act in sailing from Rio was done on the express orders of the German Government.!? There is no reason to limit piracy to acts outside territorial waters.?° If a vessel is in the ordinary meaning ofthe phrase ‘at sea’ or if the attack on her can be described as a ‘maritime offence’, then she is in a place where piracy can be committed. ' Theft without force or threat of force is not piracy.” Thus, in Athens Maritime Enterprises Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd, The Andreas Lemos’ armed men came on board a vessel intending and expecting to steal without violence but anticipated the possibility of some resistance or interference. They intended to use force or the threat of force if that possibility materialised. StaughtonJ, held that there was no loss by piracy in regard to the ship’s equipment which they threw into the sea. The loss was due to clandestine theft.* Clandestine thieves who use or threaten violence in order to escape after the theft has been committed, do not give rise to a loss by piracy.° (b) Perils where the assured is not guilty of want of due diligence Clause 6 of the Institute Time Clauses (Hulls)® and clause 4 of the Institute Voyage Clauses (Hulls)’each state that provided the loss has not resulted from want ofdue diligence by the assured, the owners or the managers, the insurance covers loss of or damage to the vessel caused by 1 2 3 4 5 accidents in loading, discharging or shifting cargo or fuel; bursting: of boilers, breakage of shafts or any latent defect in the parse 900 machinery or hull; o negligence of master, officers, crew or pilots;® fOtG> ~ OOF negligence of repairers or charterers provided such repairers or charterers are not an assured under the policy; potbd= beg barratry of master, officers or crew. 18 Viscount Simon LC, Viscount Maugham, Lord Thankerton, Lord Wright and Lord Porter. 19 See the speech of Lord Wright: [1941] 3 All ER 62 at 76. 20 ° Athens Maritime Enterprises Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd, The Andreas Lemos [1982] 2 Lloyd’s Rep 483, QBD (Com Ct) at 490 (per Staughton J). 1 Ibid, at 490 (per Staughton J). ? Ibid, at 491 (per Staughton J). 3 [1982] 2 Lloyd’s Rep 483, QBD (Com Ct). 4 Tbid, at 491. His Lordship also observed (ibid, at 491): “The very notion ofpiracy is inconsistent with clandestine theft . . . It is not necessary that the thieves raise the pirate flag and fire a shot across the victims’s bows before they can be called pirates. But piracy is not committed by stealth.’ Ibid, at 491 (per Staughton J). These clauses are set out in Appendix III, pp 537-340, post. These clauses are set out in Appendix III, pp 540-547, post. The master, officers, crew or pilots are not to be considered ‘owners’ within the meaning of the CO SO clause should they hold shares in the vessel: Institute Time Clauses (Hulls), cl 6; Institute Voyage Clauses (Hulls), cl 4. 158 Marine Wik Breakage of shafts In Scindia SS (London) Ltd v London Assurance? a vessel was insured under a time policy which contained a clause stating: . ‘This insurance also specially to cover (subject to free of average warranty) loss ofordamage to hull or machinery directly caused by accidents in loading, discharging or handling cargo, or in bunkering or in taking in fuel, or caused through the negligence of master, mariners, engineers or pilots, or through explosions, bursting of boilers, breakage of shafts, or through any latent defect in the machinery or hull.’ The vessel went into dry dock for the purpose of renewing the lower half of the wood lining of the stern bush. It was necessary to remove the propeller and withdraw the tailshaft. The shaft broke, and it fell into the dock with the propeller attached to it. One blade of the propeller was broken. The assured claimed in respect of the damage to the propeller, and the insurers admitted liability for it. But there was also a claim for the cost of replacing the tailshaft, which had fractured owing to a latent defect. It was held by BransonJ, that the cost was not recoverable. He said that even apart from the words of the clause, the breakage of the shaft was not covered and observed :'° ‘Now, what is said on the part of the [insurers] is, that that is a latent defect, and, except under those words ofthis clause which deal with latent defects, damage caused by latent defects are excluded from this clause by virtue of s55(2)(c), of the Marine Insurance Act. That seems to me to be a sound proposition. Where you have in the policy express words dealing with latent defects, and you try to isolate from that portion ofthe policy certain other words, and say that they insure against a particular peril simpliciter, I think to these words so isolated the general provisions of marine insurance law, as indicated by the section to which I have referred, must be applied and words so isolated must be read subject to those conditions of the law.’ His Lordship said that it had been argued that the clause could be read as expressly covering breakage of shafts. But this was not the true construction because the clause referred to damage caused by breakage of shafts, which was a different matter entirely. He remarked:'? ‘It seems to me that to try to isolate these words, “bursting of boilers, breakage of shafts’, from their context and to read them as if they were taken out from their position and written in immediately after the clause in brackets “‘subject to free of average warranty” so that the clause should read, “This insurance also specially to cover (subject to free of average warranty) bursting ofboilers, breakage of shafts’, you are doing such violence to the language of the clause that it is not possible to put such a construction upon it. It seems to me that the words must be read in the position in which they are found and in the context in which they are found, and, so reading them, one finds that they appear following one set of circumstances introduced by the words “‘directly caused by”’, another set of circumstances introduced by the words “‘or caused through’’, and themselves introduced by the words ‘“‘or through”. When one looks at them from that point ofview, it becomes quite obvious that they cannot be isolated in the way contended for by the plaintiffs.’ It had also been argued that ‘shafts’ were a portion of hull or machinery, and that ‘loss or damage to machinery caused by the breakage of shafts’ included the actual breaking ofthe shaft itself. But he considered that this argument also should be rejected, and said:'? ° (1936) 56 LIL Rep 136, KBD. 10 Thid, at 138. 1 Thid, at 138. 12 Ibid, at 138. Loss of or damage to insured vessel 159 ‘It is said “shafts” are a portion of hull or machinery; they are a portion of machinery, and “loss of or damage to machinery caused by the breakage of shafts’? includes the actual breaking of the shaft itself. That, it seems to me, is a forced construction ofthe language and not the ordinary meaning which, reading the clause as a bit of English prose, one would be inclined to put upon it. It comes following other clauses in which obviously the loss or damage happens to something different from the thing by which the damage is said to be caused. The first clause is ‘caused by accidents in loading”’, and so forth; “caused through the negligence of master, mariners’’, and so forth. Both ofthose clauses obviously envisage, as it seems to me, a state of affairs in which the main cause produces damage which has an effect upon something else; and I see no reason why, when one comes down after those two clauses to the one with which I have particularly to deal, one should read it in any other way.’ His Lordship then went on to express his own view of what the clause meant, and said:'* ‘It seems to me, therefore, that the proper reading is that the breakage ofthe shaft itselfisnot covered, nor can you properly say that the breakage of the shaft is a loss of or damage to machinery caused by the breaking of the shaft. The breaking ofthe shaft is the breaking of the shaft, and if, by reason of the breaking ofthe shaft, the machine is torn to pieces, then one would get damage caused by the breaking of the shaft. But in this case the only damage beyond the damage to the propeller, which has been paid for, is the actual damage which happened to the shaft itself, to wit, the breakage ofthe shaft, and the breakage ofthe shaft is not caused by the breakage of the shaft, and if that is damage to the machinery which the breakage of the shaft has caused, it seems to me you get a confusion both of thought and language which I think should not be introduced into the construction of a clause of this kind.’ Latent defect In Jackson v Mumford** it was held that weakness of design was not a ‘latent defect’ within the clause, nor was the breakage of an engine connecting rod. Moreover, a pre-existing latent defect itselfis not damage in respect of which an indemnity is recoverable, even though by wear and tear it becomes visible during the policy. Thus, in Oceanic SS Cov Faber'> a crack was discovered in the tail shaft of a vessel insured under a port policy, which contained the ‘Inchmaree’ clause, and a new shaft had to be fitted. It was held that the insurers were not liable for its cost because the crack in the old shaft had been gradually developing from a latent flaw for 10 years, and there was no damage other than the latent defect itself. In Irwin v Eagle Star Insurance Co Ltd: The Jonie'® a yacht was insured under a policy containing an ‘Inchmaree’ clause covering her in respect of loss through ‘any latent defect in the machinery or hull’. An air conditioning firm joined together a steel pipe and a brass pipe which was usually submerged in bilge water. The joint should not have been made, for when it was exposed to the presence ofair and salt water, electrolysis resulted. It was painted over and the assured was not aware of the condition of the piping. Six months after the installation the yacht sank due to a nipple in the pipe breaking. The United '3 Thid, at 139. 14 (1904) 9 Com Cas 114. ™S (1907) 13 Com Cas 28. © 11973] 2 Lloyd’s Rep 489. See also Sipowicz v Wimble, The Green Lion [1974] | Lloyd’s Rep 593, District Court of Southern District of New York, where it was held that the defect was not a ‘latent’? one because the assured knew of the condition of the metal fastenings and had performed certain work in order to restore them. (See the judgment of Cannella DJ, ibid, at 599.) 160 Marine risks States Court of Appeals, Fifth Circuit,'’ held that the assured was not entitled to an indemnity under the policy for there was no defect in the metal, but only a mistake by the air conditioning firm in joining steel and brass together. Accordingly, there was no ‘latent defect in the machinery or hull’ within the meaning of the policy.'® In Prudent Tankers Ltd SA v Dominion Insurance Co Ltd, The Caribbean Sea’? a defect consisting of fatigue cracks in a wedge-shaped nozzle which was joined to a vessel’s plate was held to be a ‘latent’ one,*° and her loss was directly due to that defect. Robert GoffJ,was of the opinion that a ‘latent’ defect was one which could not be discovered on such an examination as a reasonably careful skilled man would make.’ Negligence In Lind v Mitchell? the mortgagees of awooden schooner insured her under a time policy against perils of the sea. The policy incorporated a clause which stated: ‘This insurance specially to cover loss of vessel directly caused by accidents in loading, discharging or handling caused through the negligence of master, mariners, engineers or pilots.’ The schooner was returning to Burgeo, Newfoundland, after being holed by ice. She was intentionally set on fire by her master and prematurely abandoned. She was subsequently found by another vessel still on fire but floating high in the water. That was the last seen of her. The assured claimed for a total loss, but the insurers repudiated liability on the ground that the assured had failed to prove a loss by perils of the sea, and that she had in fact been lost by the wilful act of the master and crew in abandoning her and setting fire to her. The Court of Appeal® held that the insurers were liable to indemnify the assured because the master had been negligent, and clause 8 covered the assured against loss of the vessel through the master’s negligence. In Baxendale v Fane: The Lapwing* a yacht was insured under a time policy. Clause 5 provided: ‘This insurance also specially to cover .. . loss of or damage to hull or machinery directly caused by . . . negligence of master, mariners, engineers or pilots.’ She was negligently docked by the manager of a ship-repairing company whilst being placed in a tidal dock to have her bottom cleaned, and suffered damage. The assured claimed for a loss under the policy, and one of the defences raised by the insurer was that the manager was not the ‘master’ for the purpose of the clause set out above, and therefore the assured could not rely on 1t. '7 Wisdom, Coleman and Simpson CtJJ. "8 See the judgment of Coleman CtJ, in [1973] 2 Lloyd’s Rep 489 at 491. *? [1980] 1 Lloyd’s Rep 338, QBD (Com Ct). N ° For the evidence, see ibid, at 345-346. 1 2 3 4 Ibid, at 347. (1928) 98 LJKB 120, CA. Scrutton, Lawrence and Sankey LJJ. (1940) 66 LIL Rep 174, PDA. Loss of or damage to insured vessel 161 Hodson J, held that the claim succeeded, for the manager was the ‘master’ within the meaning of s742 of the Merchant Shipping Act 1894, and that the loss was therefore covered by the policy. He observed:* * “Master” has been defined in many statutes. In the Merchant Shipping Act 1894, s 742, ‘ “Master” includes every person (except a pilot) having command or charge of any ship.’ I have no doubt that O’Connor was the master ofthe vessel at the time ofthe first docking. He was still in charge of her. The fact that he was at the same time manager ofthe yacht works and was the servant of the yacht works, not of the plaintiff, seems to me to make no difference. Indeed, his dual position enables his negligence to be the more clearly established, because he was in a position to know what was the nature of the bottom of the dock in which he was placing the vessel.’ In Rosa v Insurance Co of the State of Pennsylvania, The Belle of Portugal® the fishing vessel ‘Belle of Portugal’ and her skiff were insured under a policy which covered (inter alia) ‘loss or damage to hull directly caused by negligence of master, charterers, mariners, engineers or pilots’. The vessel was lost due to an electrical fire, and her crew took to the boats. They were picked up by the motor vessel ‘Port Adelaide’. The crew ofthe ‘Port Adelaide’ tried to hoist the skiffon board, and it was lost. The assured claimed an indemnity from the insurers, but they repudiated liability on the ground that the skiff was not covered because it was lost through the negligence ofthe crew of the ‘Port Adelaide’. The United States Court of Appeals, Ninth Circuit,’ held that the action succeeded, for there was no proof that the crew of the Port Adelaide had been negligent, and even if they had been, the clause covered losses due to the negligence of ‘mariners’.® In Capital Coastal Shipping Corpn and Bulk Towing Corpn v Hartford Fire Insurance Co (United States of America, Third Party), The Christie,? where a tug was insured under a policy containing such a clause, the District Court for the Eastern District of Virginia, Norfolk Division, held’® that even if the person operating her had been negligent and his negligence was the cause of the loss, the assured could not recover under the policy because there had been a breach of warranty.’ * Barratry This peril appeared in Florentine policies as early as 1523 where the underwriters assumed the risk ‘di Barratteria di Padrone’ and Magens, citing Stracca, says that it appeared in policies in London and Antwerp about the same time. The term ‘barratry’ comprehends all wrong done by the master or mariners against the interests of the owner of the ship, but it does not include errors of judgment or cases of ordinary negligence. The difficulty of definition was discussed in the early case of Vallejo v Wheeler,” where the headnote states that ‘barratry is every species of fraud or knavery in the Master or mariners ofthe ship by which the owners or freighters > (1940) 66 LIL Rep 174 at 181. © [1970] 2 Lloyd’s Rep 386. 7 Merrill and Ely CtJJ, and Crocker DJ. 8 See the judgment of Merrill CtJ: [1970] 2 Lloyd’s Rep 386 at 387. ° [1975] 2 Lloyd’s Rep 100. 10 See the judgment of Hoffman Dj, ibid, at 107. 11 As to the warranty in this case, see p 295, post. 12 (1774) 1 Cowp 143. 162 M ey risks are injured’, a definition which was cited with approval by WillesJ, in Lockyer v Offley." 3 In Vallejo v Wheeler'* many definitions were cited, and Lord Mansfield said:'° barratry—to have been originally introduced by the Italians, who were ‘I take the word—ie the first great traders of the modern world. In the Italian dictionary, the word barratrare means “‘to cheat” and whatsoever is by the master a cheat, a fraud, a cozening, or a trick, is barratry in him: nothing can be so general.’ Lord Ellenborough CJ, in the later case of Earle v Rowcroft'® said:'7 ‘A breach of duty by the Master in respect to his owners with a criminal intent or ex maleficio is barratry.’ Lord Mansfield in Nutt v Bourdieu'® and Lord Ellenborough CJ, in Earle v Rowcroft'’ both expressed surprise that liability for loss to the owner resulting from the misconduct of the master should by the policy be thrown on the insurer when the master is selected and appointed by the owner himself. Such an objection, however, would not apply to a policy on goods; and in regard to policies on ships, in early times the insurer probably knew as much about the master as the owner did, and in any case received due notice of the name ofthe master who was to sail in command of the ship, by its insertion in the policy. The definition given in Rule 11 of the Rules for Construction ofPolicy in the First Schedule of the Marine Insurance Act 1906 is: ‘The term “barratry” includes every wrongful act wilfully committed by the master or crew to the prejudice of the owner, or, as the case may be, the charterer.’?° The act of barratry must be performed without the owner’s consent, for against a willing and consenting owner barratry cannot be committed, since it is obviously impossible to cheat or defraud one who orders or consents to the act of cheating or of fraud. Not only is barratry—ain its original sense—impossible against a willing and consenting owner, but a barratrous act, to which the owner consented, could not be a ground for recovering under the policy any loss caused by that act, for no one can take advantage of his own wrong.’ Therefore where the master is himself the owner, the loss occasioned by his barratrous conduct could not be recovered under the policy as a loss by barratry,” and Emerigon says that where the assured himself commands the ship, the insurers will in no case be '3 (1786) 1 Term Rep 252. ‘4 Supra. "> (1774) 1 Cowp 43 at 154. "© (1806) 8 East 126. '” Ibid, at 134. See also Phyn v Royal Exchange Assurance (1798) 7 Term Rep 505. ‘8 (1786) 1 Term Rep 323. 1? Supra. . *° For the definition of barratry given in a US case, see Steam Tanker Padre Island Inc and Pullman Bank and Trust Co v London Assurance, Guildhall Insurance Co et al, The Padre Island [1971] 2 Lloyd’s Rep 431 (District Court for the Southern District of Texas) at 432 (per Garza DJ). In this case a vessel ran aground on the Hen and Chickens Rocks in the Bahamas, and it was held that she had been deliberately stranded by the master at the command ofthe owners, and that consequently a loss by barratry had not been shown. For the evidence on this point, see ibid, pp 437-438. Stamma v Brown (1742) 2 Stra 1173; Pipon v Cope (1808) 1 Camp 434. ? Ross v Hunter (1790) 4 Term Rep 33. : Loss of or damage to insured vessel 163 responsible for his barratry, although this could not be extended to the barratry of the mariners in which the master took no part.° It has been said that the owner of a ship under charter cannot recover for a loss occasioned by an illegal and barratrous act committed by the charterers’ agent.* On the other hand, if the master with the sanction ofthe real owner commits an act of barratry towards the charterer who is pro tempore the owner, the assured on goods may recover, > the general rule being that the owner of goods is bound by the conduct of the person who is for the time being the owner of the ship,° and cannot recover for a loss occasioned by any barratrous act sanctioned by him.’ If the real owner, acting as master, intentionally runs the ship ashore, this will be barratry against the charterer.® One of the points which was argued in Rickards v Forestal Land, Timber and Rlys Co Ltd in the King’s Bench Division? (though not when the case went to the Court of Appeal’® and the House of Lords'') was whether barratry could be committed against a cargo owner. In this case a cargo was insured from South American ports to Hong Kong or Shanghai. The vessel on which the goods were loaded was a German one. She sailed from Buenos Aires on 16 August 1939. War was declared between Great Britain and Germany on 3 September. On 29 September the master, acting under the orders of the German Government, scuttled her off the Faroe Islands to avoid capture by a British warship. The cargo owners in their claim against the underwriters maintained that the cause of the loss was the barratry of the master and crew. Hilbery J, gave judgment for the underwriters, citing with approval’? the words of Lord Mansfield CJ, in Nutt v Bourdieu:** ‘The point to be considered is whether barratry, in the sense in which it is used in our policies of insurance, can be committed against any but the owners of the ship. It is clear beyond contradiction that it cannot. For barratry is something contrary to the duty of the master and the mariners, the very terms of which imply that it must be in the relation in which they stand with the owners of the ship.’ Again, in Commercial Trading Co Inc v Hartford Fire Insurance Co'* the United States Court of Appeals, Fifth Circuit, '* held that where a master delivered the insured goods to a person who did not produce all the bills of lading in respect of them, the assured’s claim for a loss by ‘criminal barratry of the master’ would be dismissed, since criminal barratry could be committed only against the shipowners. ‘© 3 Emerigon, xii, 3. 4 Hobbs v Hannam (1811) 3 Camp 93. But see Small v United Kingdom Marine Mutual Insurance Association [1897] 2 QB 311. Vallejo v Wheeler (1774) 1 Cowp 143; Soares v Thornton (1828) 7 Taunt 627. On the question as to when the freighter becomes pro tempore the owner ofthe vessel, see Belcher v Capper (1842) 4 Man&G 502 and Colvin v Newberry and Benson (1828) 8 B&C 166. Ww an Nutt v Bourdieu, supra. Soares v Thornton, supra. [1940] 4 All ER 96. 10 [1940] 4 All ER 395, CA. '! 11941] 3 All ER 62, HL. won Co ‘2 [1940] 4 All ER 96 at 112. "3 (1786) 1 Term Rep 323 at 330. 14 [1974] 1 Lloyd’s Rep 179. 1S Brown ChJ, Ingraham and Roney CtJJ. 16 See the judgment of Brown ChJ: [1974] 1 Lloyd’s Rep at 180. 164 ih. risks It has been held that a part-owner may commit barratry against his coowners, '” e g where the master being part-owner fraudulently sold the ship and cargo, and applied the proceeds to his own use. = The most common instances of barratry are those which spring from smuggling, some breach of international or municipal regulations, or which arise from deviation or scuttling. Smuggling Cases of smuggling are the most frequent; and if the master commits barratry by smuggling, the insurer is liable, although the terms ofthe policy are confined to ‘any lawful trade’.'° Where, however, the revenue authorities had seized the ship in consequence of smuggling by the master, the insurer escaped liability because Be fcands warranty, although the dominant cause of the loss was barratry.7° In another case, where the ship had been seized and forfeited, the insurer escaped liability because of the negligence of the assured, who should have prevented the repeated acts of smuggling.’ Breach of international or municipal regulations Besides smuggling, any other breach of either municipal or international law which results in a loss to the assured will be barratrous. The earliest reported case on barratry is an action on a policy of insurance, which was tried in 1724, where the fraudulent neglect of the captain to pay port dues resulted in the forfeiture of the ship, and was held to be barratry.” Breach of an embargo is also barratry;* and the conduct of the captain came under the same designation where a breach of blockade was intentionally committed, which resulted in the seizure and condemnation of the ship.* Trading with the enemy is barratry,” and so is the shipping of Kanaka labourers in violation of the Pacific Islanders Protection Act 1875.° The non-observance of the rule of the road at sea by starboarding instead of porting the helm is not barratry, although it is a violation of the rules made under the authority of an Act of Parliament;’ so in cases of this class regard must be had to the special circumstances in each instance, and to the presence or absence of fraudulent intent in performance of the act complained of. Deviation Deviation by the master for his own purposes is barratry. Thus, where the master sailed out of the course of the voyage to trade on his own account, and in 17 See also Westport Coal Co v McPhail [1898] 2 QB 130, where in regard to negligence the Court drew a distinction between negligence of the master as master, and as co-owner. ‘8 Fones v Nicholson (1854) 10 Exch 28. '? Havelock v Hancill (1789).3 Term Rep 277. °° Cory & Sons v Burr (1883) 8 App Cas 393. Pipon v Cope (1808) 1 Camp 434. Kmght v Cambridge (1724) 2 Ld Raym 1349. Robertson v Ewer (1786) 1 Term Rep 127. Goldschmidt v Whitmore (1811) 3 Taunt 508. Earle v Rowcroft (1806) 8 East 126. Australasian Insurance Co v Jackson (1875) 33 LT 286. Grill v General Iron Screw Collier Co (1868) LR 1 CP 600. WN F&F nA Yn Loss of or damage to insured vessel 165 the deviation the ship was lost, such deviation, being fraudulent, was held to be barratrous.® In Mentz, Decker & Cov Maritime Insurance Co Ltd° a policy was effected on commissions expected to be earned in respect of a vessel due to sail from San Juan del Sur, and thence to a port of loading in Costa Rica and thence to a port of discharge in the United Kingdom or on the Continent. She sailed from San Juan del Sur to Punta Arenas for orders. There her master received orders to go to load a cargo at Cocos Bay in Costa Rica. But instead of going there the master went on a voyage to the Cocos Islands, which were 250 miles away, merely to land an explorer, who was anxious to get there quickly. HamiltonJ, held that this conduct amounted to barratry, and observed:'° ‘The question, therefore, which arises first of all is: In deviating did the captain commit a barratrous act? The Marine Insurance Act in the schedule in rule 11 states that, ““The term ‘barratry’ includes every wrongful act wilfully committed by the master or crew to the prejudice of the owner, or, as the case may be, to the charterer.” The authorities prior to the Act show that where a captain 1s engaged in doing that which he must, as an ordinary man of common sense, know to bea serious breach ofhis duty to his owners, and is engaged in doing it for his own benefit, then he is acting barratrously. He may act quite barratrously in many other ways, but I think it is quite clear that if he is disregarding his duty to his owners and breaking his duty to them for the sake of private purposes and ends, his conduct is barratrous.’ A similar instance is provided by Marstrand Fishing Co Ltd v Beer.'' In this case the master of a fishing vessel named the ‘Girl Pat’ was instructed by his owners to fish in the North Sea. Instead he ran off with her with the intention oftrading with her and ultimately selling her.'? Porter J, held that an act of barratry had been committed, but that the taking of a vessel by barrators was not in itself sufficient evidence of irretrievable loss to constitute an ‘actual total loss’!? within the meaning of s 57(1) of the Marine Insurance Act 1906, nor had it been proved that the vessel was a ‘constructive total loss’** under s 60(2) (i) (a). The same view obtained where the master, in violation ofthe instructions of his owners, cruised for prizes, in consequence of which the vessel was afterwards lost, the fraud in this case being shown by the omission ofthe cruising from the log-book.?* There was also a loss by barratry where the master of a British ship trading at a British settlement proceeded to a Dutch settlement, and traded with the enemy without the consent of the owners, in consequence of which his ship was seized and condemned as a prize for trading with the enemy.'® ‘Detention, if done in the prosecution of a barratrous act, is part of the barratry for which the underwriters are liable, and not a deviation by which they are excused.’*” A deviation caused by the crew taking the ship on a different voyage is barratry. 8 Vallejo v Wheeler (1774) 1 Cowp 143. ? (1909) 101 LT 808, KBD. '© Ibid, at 810. ‘1 [1937] 1 All ER 158, KBD. 12 For the evidence on this point, see ibid, pp 159-161. 13 As to ‘actual total loss’, see pp 346-361, post. 14 As to ‘constructive total loss’, see pp 362-377, post. 15 Moss v Byrom (1795) 6 Term Rep 379. 16 Farle v Rowcroft (1806) 8 East 126. 17 Per Richardson J, in Roscow v Corson (1819) 8 Taunt 684. 166 Marine risks On the other hand, where the master, sailing with a letter of mart'® had taken a prize, and was compelled by the mariners to put back to Bristol, although his orders were to send the prize back with a prize crew and to proceed himself to Newfoundland, it was held that this was not barratry, as there was no attempt to defraud the owners. In this case the prize got in safely, but the ship was captured.*® Nor was it barratry where the master, instead of sailing to Marseilles, sailed for Genoa with the intention of returning to Marseilles, the ship on the way back being blown up in an engagement with a Spanish ship, for the Court found that the master acted for the benefit of the owners, and not in his own interest.7° Where the deviation proceeds from ignorance or want of skill and not from fraud, it is not barratry, although it may be against the interest of the owners; ' for unless accompanied by fraud or criminal intent, no case of deviation will fall within the true definition of barratry.’ So, in the case of a loss by detention, the cause of the detention must have been wilful, since mere mistake is not enough. ‘In order to establish barratry you must give positive proof of fraud’,’ for barratry means an act ofthe master in fraud of his duty to his owners. Similarly, Abbott LCJ, said in Bottomley v Bovill:* ‘A mere mistake by the captain as to the meaning ofthe instructions, or a misapprehension of the best mode of acting under the instructions and carrying them into effect, would not amount to barratry. The jury were to find for the assured if they were of opinion that the captain acted in fraud ofhis duty to his owner when he went to A instead ofto B; but if they thought, on the other hand, that he merely mistook the meaning ofthe instructions or the best mode of acting for the purpose of carrying them into effect, then to find for the underwriter.’ Thus, where the master tock his ship into a port of refuge because she had sprung a leak, and before survey he broke up her ceiling and end bows with crowbars, it was suggested that this was done in order to secure the condemnation of the vessel. Lord Ellenborough CJ, thereupon said: ‘In order to constitute barratry, which is a crime, the captain must be proved to have acted Letters of Mart and Countermart were letters granted by the Crown to subjects whose ships or other effects had been captured or arrested, independently of war, by the subjects of other States, and such letters conferred on the recipients the liberty of indemnifying themselves for what had been unjustly taken from them. They had no other object than that of repairing the wrong that had been done, and were in the form ofreprisals limited to that extent. Any person fitting out a ship for purposes of war unprovided with some such royal commission would be deemed a pirate. There was no authority to grant such a commission except in the Crown. Privateering having been ended by the Declaration of Paris 1856, the subject has lost all its former importance. "9 Elton v Brogden (1747) 2 Stra 1264. 2° Stammar v Brown (1742) 2 Stra 1173. Phyn v Royal Exchange Assurance (1798) 7 Term Rep 505. Earle v Rowcroft (1806) 8 East 126. See also, Commercial Trading Co Inc v Hartford Fire Insurance Co [1974] 1 Lloyd’s Rep 179, (US Court of Appeals, 5th Cir) at 182 (per John R Brown ChJ). In this case where a master had misdelivered the insured cargo to a third party who did not produce all the outstanding bills of lading, the Court held that barratry could not be committed against a cargo owner, and in any event, the master’s acts did not show any criminal intent to defraud or in any way harm the owners. * Per Abbott LCJ, in Bradford v Levy (1825) Ry&M 331. * (1826) 5 B&C 210 at 212. Loss of or damage to insured vessel 167 against nts better judgment; as the case stands, there is a whole ocean between you and barratry.’° Scuttling Barratry often takes the form ofintentional scuttling by the master or members of the crew. Thus, in Elfie A Issaias v Marine Insurance Co Ltd® the vessel was sunk by the intentional admission of sea water into her by the acts of the master and engineer in _removing a pipe in the condenser and removing the sea connections.’ The Court of Appeal® held that this was an act of barratry for which the insurance company must indemnify the assured.” In Rickards v Forestal Land, Timber and Rlys Co Ltd‘® a cargo was insured for carriage on a German vessel from South American ports to Hong Kong or Shanghai. The vessel arrived at Rio on 25 August 1939. War was declared on 3 September 1939. After 16 August 1939 all German owned shipping had been taken control of by the German Government, and all vessels and their masters had been ordered to take refuge in neutral ports or to return to Germany, or asa last resort to scuttle themselves. The vessel sailed from Rio on 6 September 1939 and was subsequently scuttled off the Faroe Islands to avoid capture by a British warship and the insured cargo was lost as well. The House of Lords"? held that the loss of the cargo could not be regarded as caused by barratry ‘because it must be assumed that [the master’s] owners were equally with Eee with, or subject to the orders of the German Government’. In Piermay Shipping Co SA and Brandt’s Ltd v Chester, The Michael’? a vessel sank and became a total loss, and the assured claimed for a loss by barratry.'* It was common ground that she had been deliberately sunk by the second engineer. The insurers denied liability contending that he had acted with the assured’s HOOWEEB and consent. Kerr J, held that the action succeeded for, on the evidence, '* the thought of sinking the vessel never crossed the assured’s mind. The decision was subsequently affirmed'® by the Court of Appeal.’ Changing sides in a civil war In Republic ofChina Merchants Steam Navigation Co Ltd and United States of America v National Union Fire Insurance Co of Pittsburgh, Pennsyluama, The Ha Hsuan'® six > Todd v Ritchie (1816) 1 Stark 240. Examples of barratry in this sense are to be found in Ross v Hunter (1790) 4 Term Rep 33; Toulmin v Anderson (1808) 1 Taunt 227; Heyman v Parish (1809) 2 Camp 149; and Soares v Thornton (1817) 7 Taunt 627. (1923) 15 LIL Rep 186, CA. The evidence on this point is set out ibid, at 187-188, 190. Lord Sterndale MR, Warrington and Atkin LJJ. The Court also considered the question ofthe burden of proofin the case of a claim for loss by Dd Orn 0 barratry. This aspect of the case is to be found at pp 245-247, post. 0 [1942] AC 50, [1941] 3 All ER 62, HL. 'l Viscount Simon LC, Viscount Maugham, Lord Thankerton, Lord Wright and Lord Porter. 12 [1941] 3 All ER at 76 (per Lord Wright). 13 [1979] 1 Lloyd’s Rep 55, QBD (Com Ct). 14 The insured risk sued upon was not perils of the sea but barratry alone, which appeared to be unprecedented: ibid, at 56 (per Kerr J.) 15 The evidence is set out ibid, at 60-62, 64-66, 72-88. 6 [1979] 2 Lloyd’s Rep 1. 17 Roskill and Brandon LJJ, and Sir David Cairns. 18/1958] 1 Lloyd’s Rep 351 (US Court of Appeals, 4th Cir). “ 168 =Marine risks vessels at Hong Kong belonging to the Chinese Nationalist Government were ordered to sail to Formosa or to Japan. Instead of going there the masters of the vessels concerned ran up the Red Flag, and held them for the benefit of the Chinese Communist Government. The United States Court of Appeals*® held that this constituted ‘barratry’. Circuit Judge Soper said that the insurance company had contended that masters and mariners who changed sides during a civil war could not be considered to have committed barratry, and observed :7° ‘ ‘The answer to this is simply that the characterization of an act as barratrous is independent of the motives which provoked the act. In The Jupiter (No 3)' the master, who had been placed in command of a vessel by the administrator for White Russian interests, allowed the USSR to gain possession of his ship. The Court decided that the master ‘‘may have acted as a loyal 9 subject of the USSR, but he betrayed his trust to his employers”. Another Chinese Nationalist vessel in the case was under a charter-party from Spain to Japan. She was directed to proceed to Formosa, but the crew refused to carry out the orders of her master, who intended to comply with his owners’ instructions. When she was about 30 miles west of Singapore, the engine-room staff stopped the engine and turned off the telemotor. The master ordered the anchor to be dropped to avoid a possible danger to her. He had had no food for several days and was sick with fear. On the master’s refusal to take her to Singapore, the chief officer sailed her there himself, and on the same day, the master was admitted to Singapore General Hospital. Two days later the vessel flew the Communist flag. The Court held that these acts constituted ‘barratry’. Effect of owner’s negligence The insurer will not be liable when the assured is guilty of gross negligence, and might have prevented the acts of barratry. Thus, where a ship was seized for smuggling at Weymouth, and after being liberated was again seized at Jersey for another act of smuggling, and after being again liberated was seized at Weymouth for a third offence, Lord Ellenborough CJ, said: ‘This is a clear case of crassa negligentia on the part of assured. It was his duty to have prevented these repeated acts of smuggling by the crew. By his neglecting to do so, and allowing the risk to be so monstrously enhanced, the underwriters are discharged.’? Date of liability The liability of the insurer commences from the time when the barratrous act which results in the loss is committed, eg from the commencement of a barratrous deviation.°* But Lord Ellenborough CJ, held that where the conduct of the master resulted in the condemnation and sale of the ship, the cause of action did not accrue to the assured until delivery of the ship to the purchaser, and '? Chief Judge Parker, Circuit Judge Soper and Circuit Judge Haynsworth. 2° [1958] 1 Lloyd’s Rep at 361. AS [1927] 122: > Pipon v Cope (1808) 1 Camp 434; and see Marine Insurance Act 1906, s 55(2) (a). > Brown v Smith (1813) 1 Dow 349; Falkner v Ritchie (1814) 2 M&S 290; Dixon v Reid (1822) 5 B& Ald 597. Loss of or damage to insured vessel 169 consequently that was the date from which the Statute of Limitations began to run. The insurer is not liable unless the actual loss takes place while the policy attaches, and the fact that the act of barratry was committed during the life of the policy makes no difference. Thus, where the ship was insured for a voyage, and during the voyage the master committed an act of smuggling which resulted in the seizure of the ship after she had been moored 24 hours in good safety, the insurer was held not liable for the loss.° Evidence , A condemnation proceeding upon an attempt to commit a breach ofa blockade is by no means conclusive evidence of a loss by barratry.° It is never necessary for the assured to prove that the master was not the owner.’ Where the acts and the evidence relied on as constituting barratry are consistent with ignorance on the part of the master and with obedience to the orders of the owners, such acts would be deemed innocent and not barratrous,® unless, of course, they are accompanied by fraud or crime.” Want of due diligence In Pacific Queen Fisheries v L Symes, The Pacific Queen'® a wooden-hulled motor vessel was insured under a policy containing such a clause, and was lost as a result of an explosion and a fire. The United States Court of Appeals, Ninth Circuit,'’ held that the insurers were not liable to indemnify the assured because the loss fell within the proviso to the clause, viz ‘provided such loss or damage has not resulted from want of due diligence by the Owners of the Vessel, or any of them, or by the Managers’, and had resulted from want of due diligence on the part of the assured to prevent the explosion.’ In F B Walker & Sons Inc v Valentine’? a tug was insured under a policy which contained a clause stating that it covered ‘loss ofordamage to the vessel insured directly caused by the negligence of the master. . . .; Provided such loss has not resulted from want of due diligence by the assured’. The vessel sank at a wharf due to excessive leakage of water through the rudder post and main engine stuffing boxes. The United States Court of Appeals, Fifth Circuit,'* held that the insurers were liable on the policy, for, on the evidence, although it was good 4 Hibbert v Martin (1808) 1 Camp 538. Lockyer v Offley (1786) 1 Term Rep 252. Everth v Hannam (1815) 6 Taunt 375. Ross v Hunter (1790) 4 Term Rep 33. Everth v Hannam, supra. Earle v Rowcroft (1806) 8 East 126 at 139. = ° [1963] 2 Lloyd’s Rep 201 (US Court of Appeals, 9th Cir). OmrI Oo DW '! Circuit Judge Pope, Circuit Judge Barnes and Circuit Judge Hamley. 12 [1963] 2 Lloyd’s Rep at 212-3. 3 [1970] 2 Lloyd’s Rep 429. The case also concerned a breach of warranty. As to this point, see pp 294-295, post. 14 Brown ChJ, Jones and Carswell CtJJ. y 170 Marine risks seamanship to tighten up the main engine stuffing boxes and this had not been done, it was not due to any ‘want of due diligence’ by the assured.’° In Coast Ferries Ltd v Century Insurance Co of Canada, The Brentwood 1© the assured had insured a vessel under a time policy, which stated (inter alia) that they were covered in respect of loss or damage to her directly caused by the negligence of the master ‘provided such loss or damage has not resulted from want of due diligence by the assured’. The vessel sailed with a freeboard of only 18 inches at the stem. A bow wave entered the ventilators. She lost stability, rolled over, and had to be beached. The proximate cause of the loss was unseaworthiness caused by negligent loading by the master. The Court of Appeal of British Columbia’’ held that the assured were not entitled to an indemnity under the policy, for they had failed to furnish the master with sufficient information about minimum freeboard and trim for the vessel to enable him to exercise sound judgment in loading in the light of his skill and experience. Accordingly, the loss had resulted from ‘want of due diligence’ on their part.'® In Rhesa Shipping Co SA v Edmunds, The Popi M,'° where a vessel was thought to have collided with a submerged submarine,*° Bingham J, at first instance held that in all probability she would have been lost without the negligence of the crew because her aftermost compartments would not have been flooded. But the insurers’ defence that there was a want of due diligence on the part of the assured failed for no matter how assiduous and careful owners or managers might be, they could not be expected to instruct sea-going officers to take steps and precautions so elementary and obvious to those which were neglected in the present case. (c) Pollution hazard Clause 6 of the Institute Time Clauses (Hulls)? and clause 4 of the Institute Time Clauses (Voyage)® state that the policy covers loss of or damage to the vessel caused by any governmental authority acting under the powers vested in it to prevent or mitigate a pollution hazard, or threat ofit, resulting directly from damage to the vessel for which the insurers are liable under the policy. But the insurers are under no liability where the act of the governmental authority has resulted from any want of due diligence by the assured, the owners or the managers of the vessel.* 2 DAMAGE CAUSED TO ANOTHER VESSEL Clause 8 of the Institute Times Clauses (Hulls)* and clause 6 of the Institute ' See the judgment of Brown ChJ: [1970] 2 Lloyd’s Rep at 430. '© [1973] 2 Lloyd’s Rep 232. '7 Nemetz, Taggart and Davey JJ. "8 See [1973] 2 Lloyd’s Rep at 234. '? [1983] 2 Lloyd’s Rep 235, QBD (Com Ct). *° As to this aspect of the case, see p 250, post. See [1983] 2 Lloyd’s Rep 235 at 250. The House of Lords, however, subsequently held that the assured had failed to prove that the vessel was lost by a peril insured against, and the claim therefore failed: (1985) Financial Times, 22 May. See p 250, post. > These clauses are set out'in Appendix III, pp 533-540, post. > These clauses are set out in Appendix III, pp 540-547, post. Masters, officers, crew or pilots are not to be considered ‘owners’ within the meaning of the clause should they hold shares in the vessel: Institute Time Clauses (Hulls), cl 6; Institute Voyage Clauses (Hulls), cl 4. j wn These clauses are set out in Appendix III, pp 533-540, post. Damage caused to another vessel 171 Voyage Clauses (Hulls)® each contain a ‘3/4ths Collision Liability’ Clause, which states that i the insurers agree to indemnify the assured for 3/4 of any sum or sums paid by the assured to any other person or persons by reason of the assured becoming legally liable by way of damages for a oss of or damage to any other vessel or property on any other vessel; b delay or loss ofuse of any such other vessel or property on her; and c general a average of, salvage of, 0 or ‘salvage under contract E any such other vessel or property < on her, where such payment by the assured is in consequence of the insured vessel coming into collision with any other vessel. where the insured vessel is in collision with another vessel and both yessels_are to blame, then, unless the liability of one or both vessels becomes limited by law, the indemnity must be calculated on the basis of cross-liabilities as if the respective owners had been compelled ill to pay to each other such proportion of each other’s damage as may have been properly allowed in ascertaining the balance or sum payable by or to the assured in consequence of the collision; in no case will the insurers’ liability exceed their proportionate part of 3/4 of the insured value of the insured vesselin consequence of the collision,” SS eae _— petheeessne the insurers will pay 3/4 of the legal costs incurred by the assured or which the assured may be compelled to pay in contesting liability or taking proceedings to limit liability, with the prior consent of the insurers; and the indemnity in no case extends to any sum which the assured pays for or in respect of a removal or disposal of obstructions, wrecks, cargoes or any other thing whatever; b any real or personal property or thing whatsoever except other vessels or property on other vessels; c the cargo, or other property on, or the engagements of, the insured vessel; d_ loss of life, personal injury or illness; or e pollution of or contamination of any real or personal property or thing whatsoever (except other vessels with which the insured vessel is in collision or property on such other vessels). Clause 9 of the Institute Time Clauses (Hulls) and clause 7 of the Institute Voyage Clauses (Hulls) also contain a ‘sister ship’ clause which states a if the insured vessel comes into collision with or receives salvage services from another vessel belonging wholly or partly to the same owners or the same management, the assured has the same rights under the policy as they would have if the other vessel were entirely the property of owners not interested in the insured vessel; and b in such cases the liability for the collision or the amount payable for the © These clauses are set out in Appendix III, pp 540-547, post. 172 Marine aks services rendered must be referred to a sole arbitrator to be agreed on between the insurers and the assured. ‘Vessel’ The word ‘vessel’ in the ‘collision clause’ has received a very extended meaning.’ In Chandler v Blogg® the word ‘ship’ was held to cover a collision with a sunken barge, which was subsequently raised ‘and sailed home. She was therefore in a position analogous to that of a vessel at anchor. It would seem, however, that the governing factor in the case of a sunken vessel is whether she still retains character as a ship or has become merely a wreck. Where she is a wreck, a collision with her would not be within the meaning ofthe words ‘collision with any other ship or vessel’. An anchor is part of a vessel, and therefore a tug striking a ship’s anchor comes into collision with a ‘vessel’.” But where a ship fouled the nets of a fishing vessel, it was held not to be a ‘collision’ within the meaning of the clause.'° In Pelton SS Co Ltd v North of England Protecting and Indemmty Association, The Zelo'' the owners of a steamship claimed against a mutual indemnity association in respect of a collision between her and the wreck ofanother vessel. Soon after the other vessel had sunk, salvage operations were begun in order to raise her from 30 feet of water, but these were unsuccessful. When the insured vessel struck her, part of the other vessel’s forecastle and a considerable part of the stem were further damaged, and any salvage operation became hopeless. The assured claimed against the insurers under the ‘collision clause’, but they refused to pay on the ground that the wreck was no longer a ‘vessel’, so the assured brought an action against the mutual indemnity association for the whole of the loss. The association paid one-quarter of the loss, but contended that they were not liable for the remaining three-quarters because she was a ‘vessel’ at the time of the collision. Greer J, accepted this contention and held that the claim in respect of the remaining three-quarters failed. The question whether the other vessel was a ‘vessel’ at the time of the collision depended on whether or not any reasonably minded owner would have continued salvage operations on her in the hope of completely recovering her and by subsequent repair. In his opinion, they did have such a reasonable expectation, and he observed:'* ‘In my judgment the salvors at the time ofthe loss had a reasonable expectation that they would be able to salve the vessel. It is not necessary for the purpose of my judgment to decide whether in fact that reasonable expectation would have been converted into fact by their further operations. If they had reasonable expectation of being able to salve this vessel so that McCowan v Baine and Johnston, The Niobe [1891] AC 401. 8 [1898] 1 QB 32. Re Margetts and Ocean Accident and Guarantee Corpn [1901] 2 KB 792. Bennett SS Co v Hull Mutual SS Protecting Society [1914] 3 KB 57. See also Lehigh and Wilkes-Barre Coal Cov Globe and Rutgers Fire Insurance Co (1925) 26 LIL Rep 82 (US Court of Appeals, 2nd Cir), where it was held that a barge, which had been damaged when it came into contact with the bank of a canal, had not been involved in a ‘collision’ within the meaning of the ‘collision clause’, nor had another barge which had struck some steep rocks along the shore. '! (1925) 22 LIL Rep 510, KBD. Ta bidwatyol2: Damage caused to another vessel 173 she could be repaired and again navigated, she remained a vessel within the meaning of the clause in the principal policy and within the meaning of the rules to which I have referred.’ His Lordship said that he did not agree with the test of ‘navigability’ suggested in Chandler v Blogg,'* and remarked :'* ‘The only case which is at all near this to which my attention has been called is the case of Chandler v Blogg,'* where it was held that a barge which was lying at the bottom and was damaged by collision by another ship was still a ship or vessel although at the moment of collision it could not be navigated, if it was capable of being easily raised, and it became navigable as soon as it was raised; and the judgment of Bigham J, rather suggests that he accepted in some sense the test of navigability as a test of whether the thing in question was or was not a ship or vessel, not,as an absolute test, because it is clear in that case that at the moment ofcollision the vessel was not navigable, but he seemed to base his judgment upon the fact that the vessel had become navigable the moment she was brought to the surface. It seems to me, with great respect, that navigability cannot be the test as to whether the thing is or is not a ship or vessel. I mean navigability at the time of collision, because in this case, Chandler v Blogg,'® the vessel was not navigable at the time of collision. It does not seem to me you can test whether a vessel at the bottom is or is not a ship or vessel by saying she will be navigable immediately she comes to the surface. You must apply some other test; and I cannot find any better test than the question whether or not any reasonably minded owner would continue salvage operations in the hope of completely recovering the vessel by those operations and subsequent repair.’ In Merchants’ Marine Insurance Co Ltd v North of England Protecting and Indemnity Association’’ the plaintiffs were the insurers ofa vessel against maritime risks, and claimed from the defendants, who were an indemnity association of which the owner of the vessel was a member, an indemnity against liability incurred for damage arising out of a collision between her and a pontoon crane in the River Charente. Under the rules of the indemnity association a member was protected against damages to the extent of one-fourth which he might become liable to pay in respect of collision between his vessel and ‘any other ship or vessel’. Under another rule he was protected against the whole damage, ‘which the member or owner may become liable to pay . . . in respect of damage done by the steamship to any harbour, dock, or pier, or quays, or works connected therewith or tojetties, erections or any fixed or moveable things, other than ships or vessels.’ The Court of Appeal’? held that the plaintiffs were entitled to an indemnity in respect ofthe whole of the damage because the pontoon crane was not a ‘ship or vessel’ within the rules of the indemnity association. The primary purpose for which it was designed and adapted was to float and to lift, and not to navigate, and, that adaptability for navigation was an essential element of a ‘ship or vessel’. Bankes LJ, said:'° ‘Now what do we find with regard to the structure? It is, in fact, a structure upon which a crane is fixed, and permanently fixed. It has no motive power of its own. I do not attach much "3 "4 'S © [1898] 1 QB 32. (1925) 22 LIL Rep at 512. Supra. Supra. 17 (1926) 26 LIL Rep 201, CA. 18 Bankes, Scrutton and Sargant LJJ. 19 (1926) 26 LIL Rep at 202. See also the judgment ofScrutton LJ, ibid, at 203, and that of Sargant LJ, ibid, at 203. 174 WWMarine*risks importance to that, but it is an incident. It is not capable of being steered: it has no rudder. I think that again is only an incident, but I think it is rather an important incident. It is undoubtedly capable of being moved, but it is obviously so unseaworthy that it can only be moved short distances, or comparatively short distances, and only when the weather is exactly favourable. It is a most unwieldy structure. Its arm, orjib, is 70 ft long: it is fixed athwart the platform with two fixed struts, and obviously, upon looking at it, it is a most unseaworthy structure. We have also its life history, to this extent, that it was built very many years ago—in 1868, I think the date is. Everyone agrees that the fact that it had to be towed a considerable distance to the place where the crane was fitted is immaterial for the present purposes. One has to consider what it is and what it has been since it became a floating crane, and, so far as the information goes, it has only been moved very occasionally during all these years. I think there are about five or six times when it has been moved since 1914, and therefore, although it is obviously movable and it obviously must be moved, in order to make it an effective crane, from time to time, the conclusion I come to is that, for this purpose and for the purpose ofthe construction ofthis rule, it is more accurately described as a floating platform for this crane than asa ship or vessel. I desire to say, speaking for myself, that I do not think it is possible to frame an exhaustive definition which will be of assistance in other cases, or to attempt an exhaustive test to apply for the purpose of deciding whether any particular object 1s a ship or vessel.’ In Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd?® a ship was insured under a policy containing a ‘collision clause’, which provided that the insurer would indemnify the assured ‘if the ship hereby insured shall come into collision with any other ship or vessel and the assured shall in consequence thereof become liable to pay and shall pay by way of damages to any other person... any sum’. The insured ship negligently collided with a flying boat causing damage which the assured paid. The assured claimed an indemnity from the insurer. It was held by the King’s Bench Division that the action failed. The words ‘ship or vessel’ did not include a flying boat. Atkinson J, said:! ‘The conclusion at which I have arrived is that in this policy it is impossible to hold that the words “‘ship or vessel’ include this flying boat. I do not want to attempt a definition, but I think a ship or vessel does involve two ideas. If Ihad to define them, I should say a vessel was any hollow structure intended to be used in navigation, that is, intended to do its real work upon the seas or other waters, and which is capable offree and ordered movement from one place to another. Its ability to navigate is not merely incidental to the work for which it is really intended. A seaplane’s real work is to fly. That is its real work and what it is built for, and its ability to float and navigate short distances is merely incidental to its real work, and to my mind that is where the real difference lies. A ship or vessel must be something which is intended to do its real work upon the waters, and it has got to be capable offree and ordered movement.’ ‘Damages’ The clause covers only collision damages payable in respect of a tort. It does not cover liability arising in contract.” Thus, in Furness Withy @ Co Ltd v Duder* a marine insurance policy included the ‘collision clause’ by which the insurer agreed to indemnify the assured ‘if the ship hereby insured shall come into collision with any other ship or vessel and the assured shall in consequence thereof become liable to pay by way of damages to any other person any sum...’ An Admiralty tug was engaged by the assured to tow the insured ship. The towage contract contained a clause 20 [1943] KB 161, [1943] 1 All ER 162, KBD. ' Ibid, at 165. > Furness Withy @ Co Ltd v Duder [1936] 2 KB 461, [1936] 2 All ER 119, KBD. ; > [1936] 2 All ER 119, KBD. Damage caused to another vessel 175 under which the assured agreed ‘to make good to the Admiralty all damage suffered by the Admiralty through injury to Admiralty property . . . by reason of or arising out of. . . the service [of the tug]’. The insured ship collided with the tug owing to the negligent navigation of the tug. The assured paid the amount of the damage to the Admiralty, and claimed an indemnity from the insurer under the ‘collision clause’. It was held by the King’s Bench Division that the action failed. The clause only applied to liability arising in tort, and not to liability arising out of a towage contract. _ Branson J, said:* “The question here is whether the £119 12s 8d, which the plaintiffs have paid to the Admiralty is asum which they became liable to pay in consequence ofthe ship having come into collision with another ship, and became liable to pay by way of damages. Mr Miller urges that the collision was the proximate cause of the liability on the part of the plaintiffs to pay, and therefore that it can correctly be described as the cause in consequence ofwhich the plaintiffs became liable to pay. But my view is that the [collision] clause must be read as one sentence. It does not help to divide it into two and to ask oneself whether payment arose in consequence ofthe collision, and was it, ifit did so arise, a payment in consequence of damage. It leads to a clearer view of the meaning of the clause to read it as it was written in one sentence and to ask oneself, “What did the parties mean? What are the circumstances that the parties contemplated?” It may be that this is no more than a case of first impression. Looking at it from that point ofview, I think that the sentence means that where, as a result of the collision, there arises a legal liability upon the shipowners to pay something which may be described as damages, then the underwriters will indemnify. The expression ‘“‘become liable to pay and shall pay by way of damages” indicates a method ofliability arising by way oftort and not by way of contract. There is no such liability here.’ In Hall Bros SS Co Ltd v Young, The Trident? a vessel was insured under a policy which contained a ‘collision clause’ in the usual form, viz: ‘And it is further agreed that if the ship hereby insured shall come into collision with any other ship or vessel and shall in consequence thereof become liable to pay and shall pay by way of damages to any other person or persons any sum or sums in respect of such collision the undersigned will pay the assured such proportion ofthree-fourths of such sum or sums so paid as their respective subscriptions hereto bear to the value of the ship hereby insured . .’ After the insured vessel arrived off Dunkirk a pilot boat approached her. The pilot boat’s steering gear broke down, and a collision occurred. The insured vessel was in no way to blame. Under article 7 of the French Law dated 28 March 1928 it was provided that: ‘Except in cases ofgross negligence of the pilot, the ‘‘avarzes’”’ sustained by the pilot vessel in the course of pilotage operations and in the course of embarking or disembarking the pilot is chargeable to the ship.’ Under this law the assured paid £432 7s 6d to the Pilotage Administration, and claimed to recover from the insurers three-fourths of that sum. It was held by the Court of Appeal® that the insurers were not liable. The ‘collision clause’ only extended to liabilities which arose by way of damages. Sir Wilfred Greene MR, considered that the very special liability imposed by * Ibid, at 120. > (1939) 63 LIL Rep 143, CA. © Sir Wilfred Greene MR, MacKinnon and Finlay LJJ. ~ 176 Marine risks French law was not one which fell under the head of damages, and observed 7 ‘The result in my opinion is, in a sentence, that the very special liability imposed by art 7 of the French law of 28 March 1928, is not one which, upon the true construction of the “{collision] clause’’, falls under the head of a sum which the assured became liable to pay by way of damages in respect ofthe collision. Whatever else it may be, it is in its nature outside the word ‘“‘damages”’ as used in the clause.’ MacKinnon LJ, held further that the liability was not one ‘in consequence of the collision but in consequence of French law’, and said:° ‘This liability, in my view, was not proximately caused by the collision, and it was not caused by the collision at all. This liability was caused by the French law, which created a liability on the ship to pay for any damage caused to the pilot boat by any cause, and, of course, “‘any cause” included collision. I think the liability for this expense was not a liability in consequence of the collision but in consequence of the French law, even though by the operation of that law the damage to the pilot boat did arise by reason of this collision.’ Finlay J, was also of the same opinion, for he said:? ‘This was not a payment by way of damages in any possible sense in which that word could be used in an English clause of this character, and in the second place it appears to me to result, as my brother MacKinnon has pointed out, that the payment, whatever it was, was not made in consequence ofthe collision but was made because the French law has imposed a liability— nothing to do with collision, though collision is one of the matters which may arise—to make a payment in case of damage suffered by the pilot vessel during the pilotage, during the manoeuvres necessary for embarking and disembarking the pilot.’ 3 GENERAL AVERAGE AND SALVAGE Clause 11 of the Institute Time Clauses (Hulls)'° and clause 9 of the Institute Voyage Clauses (Hulls)'’ each state that athe policy covers the vessel’s proportion of salvage,'? salvage charges’* and/or general average,'* reduced in respect of any underinsurance, but in case of general average sacrifice of the vessel the assured may recover in respect of the whole loss without first enforcing their right of contribution from other parties; b adjustment is to be according to the law and practice obtaining at the place where the adventure ends, as if the contract of affreightment contained no special terms on the subject, but where the contract so provides the adjustment is to be according to the York—Antwerp Rules c 1974;'> where the vessel sails in ballast, the provisions of the York—-Antwerp Rules 1974 apply;'® and (1939) 63 LIL Rep at 147. See also the judgments of MacKinnon LJ, ibid at 148, and of Finlay LJ, ibid, at 148. (1939) 63 LIL Rep at 148. Ibid, at 148. R 10 These clauses are set out in Appendix III, pp 533-540, post. 11 These clauses are set out in Appendix III, pp 540-547, post. 12 See pp 192-194, post. 13 See pp 192-193, post. 14 See pp 182-192, post. 15 See pp 187-192, post. Except Rules XX and XXI. The voyage for this purpose is deemed to continue from the port or place of departure until the arrival of the vessel at the first port or place thereafter other than a 16 General average and salvage d_ 177 no claim lies where the loss was not incurred to avoid or in connection with the avoidance of a peril insured against. B FREIGHT CLAUSES The Institute Time Clauses (Freight)'’ and the Institute Voyage Clauses (Freight)'® contain clauses similar to those in the Institute Time Clauses (Hulls)'? and the Institute Voyage Clauses (Hulls)?° in that they set out 1 the extent of the cover in respect of the loss of the freight;' the insurers’ liability should the vessel come into collision with another 3 provisions relating to general average and salvage.° vessel;” C CARGO CLAUSES The Institute Cargo Clauses are of three types, the risks insured against being different in each case: 1 1 2 3. The Institute Cargo Clauses (A); The Institute Cargo Clauses (B); and The Institute Cargo Clauses (C). THE INSTITUTE CARGO CLAUSES (A) The Institute Cargo Clauses (A)* contain 1 il wee ili (i) a risks clause; a general average clause; and ¢ ons 2 a ‘both to blame collision’ clause. Risks clause Clause | ofthis set of clauses states that with certain specified exceptions,°the policy covers all risks of loss or damage to the cargo. port or place of refuge or place ofcall for bunkering only: Institute Time Clauses (Hulls), cl 11; Institute Voyage Clauses (Hulls), cl 9. If at any such intermediate port or place there is an abandonment ofthe adventure originally contemplated, the voyage is thereupon deemed to be terminated: ibid. 17 These clauses are set out in Appendix III, pp 550-554, post. 18 These clauses are set out in Appendix III, pp 555-558, post. 19 See pp 535-542, post. 20 See pp 544-551, post. ' See the Institute Time Clauses (Freight), cll 7 and 8, and the Institute Voyage Clauses (Freight) cll 5 and 6. See cll 9 and 10, and cll 7 and 8 respectively. See cl 11 and cl 9 respectively. These clauses are set out in Appendix III, pp 516-522, post. For the exceptions, see pp 256-257, post. fF wn WN Wksy aislwee risks Examples from the reported decisions The precise wording of ‘all risks’ clauses varies as can be seen from the reported cases on the subject.° In British and Foreign Marine Insurance Co v Gaunt’ a cargo of wool had been insured from Patagonia to England under a policy which stated : land ‘Including all risk of craft, fire, coasters, hulks, transhipment and inland carriage by and/or water, and all risk from the sheep’s back and/or station, while awaiting shipment and/or forwarding and until safely delivered . . . with liberties as per bill of lading.’ On delivery the wool was found to have been damaged by wet. In an action on the policy by the buyers of the wool to whom the policy had been assigned, it was proved that the wool was sometimes stored in the open, that it was frequently carried on deck on the local steamers to the port of shipment where it was loaded on to ocean steamers, and that they had experienced bad weather while the wool was in transit. The damage sustained was exceptional. The insurers contended that the buyers had failed to establish affirmatively a loss by an insured peril. The House of Lords® held that the claim succeeded. Since the policy was against ‘all risks’, it was sufficient to show that the loss was caused by a casualty or something accidental without proving the exact nature of the casualty or accident which caused the loss. There was evidence in the present case of an abnormal incident. Lord Birkenhead LC, observed:? ‘The damage proved was such as did not occur, and could not be expected to occur, in the course of a normal transit. The inference remains that it was due to some abnormal circumstance, some accident or casualty. We are, of course, to give effect to the rule that the plaintiff must establish his case, that he must show that the loss comes within the terms of his policies; but where all risks are covered by the policy and not merely risks ofaspecified class or classes, the plaintiff discharges his special onus when he has proved that the loss was caused by some event covered by the general expression, and he is not bound to go further and prove the exact nature of the accident or casualty which, in fact, occasioned his loss. In this case the respondent established that the loss must have been due to some casualty.’ In Re National Benefit Assurance Co Ltd (Application of H L Sthyr)*° 30 bales of woollen goods were insured under an ‘all risks’ policy from Tilbury to Novorossisk for Rostoff-on-Don. The policy contained a clause stating: ‘This insurance also covers the risks excluded by the following clause in marine policies on English conditions: ““Warranted free of capture, seizure, arrest, restraint, or detainment, and the consequences of hostilities or warlike operations whether before or after declaration of war.” E g Hyderabad (Deccan) Cov Willoughby [1899] 2 QB 530 (bullion insured ‘at and from Boodini to London, including all risks of every description, from the mines by escort to railway station at Raichur, thence by rail to Bombay, and thence to London’); Jacob v Gaviller (1902) 7 Com Cas 116 (fox terrier insured ‘against all risks from London to Bombay, and thence by rail to Lahore’); Schloss Bros v Stevens [1906] 2 KB 665 (goods insured ‘against all risks by land or by water from Cartagena to any place in the interior of Colombia). [1921] All ER Rep 447, HL. The case also concerned a trade usage to carry cargo on deck. As to this point, see pp 107-108, ante. Lord Birkenhead LC, Viscount Finlay, Viscount Cave, Lord Atkinson and Lord Sumner. {1921} All ER Rep at 450. See also the speech ofViscount Finlay, ibid, at 452, and that of Lord Sumner, ibid, at 455. (1933) 45 LIL Rep 147, ChD. Another aspect of this case ie whether the assured had an insurable interest is considered at p 18, ante. The Institute Cargo Clauses (A) 179 The goods, which were for sale on arrival at Rostoff-on-Don, arrived at Novorossisk on 4 September 1919. They were ordered to be forwarded to Rostoff-on-Don, where they were to be delivered to a person who had agreed to buy them provided that they arrived there. The goods were never heard of after leaving Novorossisk. They had not reached Rostoff-on-Don by April 1920. Fighting was going on between the Bolshevist and Czarist forces in the district. The assured claimed for a loss under the policy.'’ It was held by Maugham J, that the action succeeded. The prima facie inference to be drawn from the facts was that the goods had been lost by a risk within the policy. The burden of proving that the loss was due to an excepted peril lay on the insurers, and this burden had not been discharged. His Lordship observed :'? ‘Tam fully justified therefore in saying that the inference to be drawn was that the goods had not arrived even in the month of April, some time after the Bolshevists had got possession of Rostoff-on-Don and when there would not have been any serious difficulty in getting the goods there. I conclude therefore that there is sufficient evidence that the goods never reached Rostoff-on-Don at all, they having arrived at Novorossisk in August; and having the evidence I have ofthe terrible state of the country at the time; I think the proper inference to be drawn is that the goods never did reach Rostoff-on-Don and that there has been a total loss. Supposing that is the whole of the case, that the goods were lost and that there is no evidence to show how they were lost—whether they were seized by the Whites or the Reds or by bandits taking advantage of the unsettled state of things to loot or whether they were destroyed by accident I cannot tell. There is here, on my view ofthe facts, a loss of the goods under an all risks policy with an exception, and it would be for the underwriters to show that the events did happen within the exception.’ In Theodorou v Chester’* some bleached sponges were insured from London to New York for sale there, but since no sale took place, they were insured from New York to London under a policy covering them ‘against all risks of loss and/or damage however arising, irrespective of percentage’. The sponges were tightly packed in wooden cases or in bales wrapped in hessian. The assured found that they were damaged, and claimed against the insurers. He alleged that the goods were stained by water, dirt, paint and other substances penetrating the hessian and the cases. The insurers, on the other hand, maintained that the damage was due to normal transit risks of dust and dirt combined with the atmospheric pressure. It was held that the action succeeded. Croom-Johnson J, held that the assured under an ‘all risks’ policy was required to prove that the loss was due to an abnormal peril. He was also required to disprove any counter-theory put forward by the insurers which was designed to show that the loss was due to normal transit risks. On the balance of proof the assured had shown that the damage to the sponges was due to an extraneous and accidental cause. His Lordship adopted’* the principles relating to the burden ofproof set out by the House of Lords in British and Foreign Marine Insurance Co v Gaunt,'* and then observed :'° "l As to the evidence, see (1933) 45 LIL Rep 147 at 150. 12 Tbid, at 150. 1311951] 1 Lloyd’s Rep 204, KBD. 14 Tbid at 218-219. 'S [1921] All ER Rep 447, HL. See p 178, ante. "© [1951] 1 Lloyd’s Rep at 238. 180 Marine’risks ‘The onus ofproofis, of course, upon the plaintiffto establish those things which I indicated earlier in this judgment. There is no onus on the defendants either to account for or to explain or to satisfy me in any way about the matters which have been raised on behalf of the plaintiff. The defendants, as they are entitled to do, have put everything in issue and have in effect said to the plaintiff ‘Prove your case”’; but they have done something else, which, within my onetime considerable experience of underwriting cases, they are also fully entitled to do. They are entitled to present to the court all sorts of theories, suggestions and all the rest of it, not with a view to accepting any onus, but simply with a view to saying: ‘“‘Now, then, here are all these possibilities. You, the plaintiff, must see to it that these reasonable other explanations are negatived by your evidence, so that you do not leave anything unproved or unsustained by the case which you make to the court.” Now, approaching the matter on that basis, it is not for the defendants to satisfy me that their theories are right. It is, I think, for the plaintiffto satisfy me that these theories, if 1come to the conclusion that they are reasonably possible theories, are not right.’ In Fuerst Day Lawson Ltd v Orion Insurance Co Ltd’’ a cargo of oil drums was insured against all risks. On arrival the drums were found to contain water with slight traces of oil. Mocatta J, gave judgment for the insurers because the assured had failed to discharge the burden of proof that the oil had ever started on its transit. He considered that there was a possibility, to put it no higher, that the drums from the outset contained water with a thin film of essential oils for deception purposes. (ii) General average clause Clause 2 of this set of clauses states that the policy covers general average and salvage charges, adjusted or determined according to the contract of affreightment and/or the governing law and practice, incurred to avoid or in connection with the avoidance ofloss from any cause except those causes which are excluded. (iii) ‘Both to blame collision’ clause Clause 3 states that the policy is extended to indemnify the assured against such proportion of liability under the contract of affreightment ‘Both to Blame Collision’ clause as is recoverable in respect of a loss under the policy. Clause 3 further provides that in the event of aclaim by the shipowners under the ‘Both to Blame Collision’ clause the assured agree to notify the insurers who are to have the right, at their own cost and expense, to defend the assured against such a claim. 2 THE INSTITUTE CARGO CLAUSES (B) The Institute Cargo Clauses (B)'® contain i a risks clause; ii a general average clause; and tee ‘ sas J ula ‘both to blame collision’ clause. "7 [1980] 1 Lloyd’s Rep 656, QBD (Com Ct). '8 These clauses are set out in Appendix ITI, pp 519-522, post. The Institute Cargo Clauses (B) (i) 181 Risks clause Clause | of this set of clauses states that with certain specified exceptions,'? the policy covers a_ loss of or damage to the cargo reasonably attributable to 1 fire or explosion; 2 the vessel or craft being stranded, grounded, sunk or capsized; the overturning or derailment of a land conveyance; the collision or contact of the vessel, craft or conveyance with any external object other than water; 5 the discharge of the cargo at a port of distress; and 6 earthquake, volcanic eruption or lightning. the loss of or damage to the cargo caused by 1 general average sacrifice; 2 jettison or washing overboard, and 3 the entry of sea, lake or river water into the vessel, craft, hold, conveyance, container, liftvan, or place of storage. the total loss of any package lost overboard or dropped whilst loading on to or unloading from the vessel or craft. b_ c (11) 3 4 General average clause This clause is in the same form as clause 2 ofthe Institute Cargo Clauses (A).' (iii) ‘Both to blame collision’ clause This clause is in the same form as clause 3 of the Institute Cargo Clauses (A).? 3. THE INSTITUTE CARGO CLAUSES (C) The Institute Cargo Clauses (C)? also contain 1 ii ii1_ (i) arisks clause; a general average clause; and a ‘both to blame collision’ clause. Risks clause Clause | of this set of clauses states that with certain exceptions, the policy covers a_ loss of or damage to the cargo reasonably attributable to 1 fire or explosion; 2 3. 4 the vessel or craft being stranded, grounded, sunk or capsized; the overturning or derailment of a land conveyance; the collision or contact of the vessel, craft or conveyance with any external object other than water; and '? For the exceptions, see pp 257-258, post. " See p 180, ante. See p 180, ante. 3 These clauses are set out in Appendix III, pp 523-526, post. 182 Marine risks 5 b_ the discharge of the cargo at a port of distress. the loss of or damage to the cargo caused by 1 general average sacrifice; 2 jettison. (ii) General average clause This clause is in the same form as clause 2 of the Institute Cargo Clauses (A).* (iii) ‘Both to blame collision’ clause This clause is in the same form as clause 3 of the Institute Cargo Clauses (A).° D GENERAL AVERAGE® General average is an incident of a marine adventure and is related to marine insurance by reason of the fact that through the operation of the principle of subrogation the insurer who has to pay the loss on the interest sacrificed is, on payment of the loss, entitled to the contribution due from the owners of the interests saved.’ On the other hand, the insurer on interests saved has to make good the loss incurred by his assured in having to contribute to general average if the loss is due to a peril insured against. The contract of indemnity given by the policy is an independent contract, and has to be satisfied irrespective of the right to a general average contribution. Thus, where the assured receives a general average contribution from the other interests saved before payment by the insurer on the policy, the insurer is only liable to pay the balance of the loss. If the insurer pays the loss before payment or adjustment ofgeneral average, he becomes entitled to the rights of the assured in respect of a general average contribution. The assured cannot keep both the sum paid to him by the insurer and also the general average contribution from the other interests involved in the adventure.® 1 INSURER’S LIABILITY IN RESPECT AVERAGE EXPENDITURE OF GENERAL Section 66(4) of the Marine Insurance Act 1906 states: See p 180, ante. See p 180, ante. vn ana A detailed discussion ofthe law relating to general average would appear to be out ofplace ina book such as the present on marine insurance, for this is a matter which relates to the carriage of goods by sea rather than to marine insurance. In this book, therefore, it is only the insurer’s liability in respect of general average which is considered. For a detailed survey of the law of general average, see R Lowndes and G R Rudolf, The Law ofGeneral Average (10th edn by Sir John Donaldson, C S$ Staughton and D J Wilson), 1975 (published as British Shipping Laws, Volume 7). As to subrogation, see pp 455-460, post. orn Dickenson v Jardine (1868) LR 3 CP 639. Insurer's lability in respect of general average expenditure 183 ‘Subject to any express provision in the policy, where the assured has incurred a general average expenditure, he may recover from the insurer in respect of the proportion of the loss which falls upon him . .’ Thus, the insurer is only liable for the proper proportion of the expenditure which the person making the expenditure is himself liable for.” It is obvious in that case the liability cannot be ascertained until there has been some adjustment of the various contributory values and something in the nature of an average statement, not necessarily an average statement made out by an average adjuster, but an average statement made out by someone, by the owner or the master of the vessel.*® 2 INSURER’S LIABILITY IN RESPECT AVERAGE SACRIFICE OF GENERAL / Section 66(4) of the Marine Insurance Act 1906 states: ‘Subject to any express provision in the policy . . . in the case of ageneral average sacrifice, he may recover from the insurer in respect of the whole loss without having enforced his right of contribution from the other parties liable to contribute.’ Thus, the insurer is immediately liable for a general average sacrifice independently of any average statement being prepared, and quite independently of the working out of any proportion or contribution."* Where the insurer has indemnified the assured, he is entitled to be subrogated to the rights of the assured against the owners of other interests which are liable to contribute.’? 3 INSURER’S LIABILITY IN RESPECT AVERAGE CONTRIBUTION OF GENERAL Section 66(5) of the Marine Insurance Act 1906 states: ‘Subject to any express provision in the policy,’?where the assured has paid or is liable to pay a general average contribution in respect of the subject insured, he may recover therefor from the insurer.’ Commenting on this subsection Bailhache J, observed:** ‘Where he makes a contribution, he may recover the whole amount ofthe contribution, just as when he makes a sacrifice as distinct from expenditure, he recovers the whole amount. Both those things differ from expenditure because in the case of expenditure he only recovers the proportion of the expenditure which the person making the expenditure is liable to pay himself.’ nnn LUE EE EEEE ES 2 Brandeis, Goldschmidt & Co Ltd v Economic Insurance Co Ltd (1922) 11 LIL Rep 42 at 44, KBD (per Bailhache J). 10 Tbid. 11 Brandeis, Goldschmidt & Co Ltd v Economic Insurance Co Ltd (1922) 11 LIL Rep 42 at 44, KBD (per Bailhache J). 12 Dickenson v Jardine (1868) LR 3 CP 639. As to subrogation, see generally pp 455-460, post. 13 For an express provision in the policy whereby there had to be an adjustment before the insurer would be liable, see Brandeis, Goldschmidt & Cov Economic Insurance Co Ltd (1922) 11 LIL Rep 42 at 44, KBD. 14 Brandeis, Goldschmidt & Co Ltd v Economic Insurance Co Ltd (1922) 11 LIL Rep 42 at 44, KBD. VY 4 pervases : WHERE LOSS INCURRED NOT PERIL INSURED AGAINST FOR PURPOSE OF AVOIDING Section 66(6) of the Marine Insurance Act 1906 states: ‘In the absence of express stipulation, the insurer is not liable for any general average loss or contribution where the loss was not incurred for the purpose of avoiding, or in connection with the avoidance of, a peril insured against.’ 5 DIFFERENT INTERESTS OWNED BY SAME ASSURED General average contribution is a charge upon the interests concerned in the general average act and falls upon the insurer ofeach interest, and whether the interests are in one hand or several hands makes no difference to the liability of the insurer.'° Section 66(7) of the Marine Insurance Act 1906 states: ‘Where ship, freight, and cargo, or any two ofthose interests, are owned by the same assured, the liability of the insurer in respect of general average losses or contributions is to be determined as if those subjects were owned by different persons.’ 6 PERIOD OF LIMITATION In Chandris v Argo Insurance Co Ltd‘® a general average loss in respect of an insured vessel had been incurred more than 6 years before the issue ofthe writ, although a general average statement had been completed and issued within 6 years before this date. When sued by the assured, the insurance company pleaded that the action was statute-barred under the Limitation Act 1939, s 2(1),’’ contending that it was not liable since the period oflimitation began to run from the date ofthe loss, or alternatively from the date of the termination of the adventure in the course of which the loss was incurred. The assured, on the other hand, claimed that there was an implied term in the contract of insurance that time should not run at all. Megaw J, held’? that, although the evidence'® which had been adduced showed that the Limitation Act 1939 had never been pleaded by insurers on the London market in answer to claims on marine policies on hulls, it did not lead to the conclusion that there ought to be implied in all such contracts that insurers agreed not to invoke their rights under the statute. In the alternative the assured contended that the period oflimitation did not begin to run until a general average statement had been completed and issued. In support of this argument they cited clause 8 of the Institute Time Clauses (Hulls), which were incorporated into the policy. Clause 8 provided: 'S Montgomery & Co v Indemnity Mutual Insurance Co [1902] 1 KB 734, CA. ‘© [1963] 2 Lloyd’s Rep 65, QBD (Com Ct). "7 Which provides that: ‘The following actions shall not be brought after the expiration ofsix years from the date on which the cause ofaction accrued, that is to say, (a) actions founded on simple contract ...’ See now Limitation Act 1980, s 5. "8 [1963] 2 Lloyd’s Rep at 75. 19 As to the evidence, see ibid, at 75. Period of limitation 185 ‘General average . . . to be adjusted according to the law and practice obtaining at the place where the adventure ends, as if the contract of affreightment contained no special terms upon the subject; but where the contract of affreightment so provides the adjustment shall be according to York—Antwerp Rules 1890 .. . or York-Antwerp Rules 1924.’?° That showed, they said, that the preparation and the issue of a general average adjustment was a condition precedent to the accrual of liability on the part of the insurer. The contention was also rejected by the learned Judge who observed;' ‘As a preliminary observation on this question, I would say that Luckie v Bushby? and The Wavertree* case, both of which I have previously cited, show that, in the absence of express contractual provision, an average adjustment when prepared is in no way conclusive. The insurer, or another party to the adventure is free to say that the adjustment is wrong, on the facts or the manner of computation, or both. If so, the shipowner must prove his case in the Courts, and he does not prove it by merely producing an average adjustment, even one prepared by an independent professional adjuster. It is difficult, in my view, to suggest that the production ofan adjustment, which, when produced is in no way binding or conclusive, would as a matter of business efficacy be regarded by the parties as a condition precedent to a cause of action; that is, as an event which causes time to start to run. Further, it must be observed that ifthe plaintiffs are right, it means that the assured has it in his power to postpone indefinitely the accrual of the cause of action and the commencement of the running of time under the statute, unless, indeed, some further term is to be implied into the contract of insurance, requiring reasonable expedition in the preparation of the adjustment and its issue when prepared.’ His Lordship also said* that s 66(3) of the Marine Insurance Act 1906 showed that the right to receive and the liability to pay the contribution arose on the occurrence of the general average loss. Again, in his opinion,” clause 8 ofthe Institute Time Clauses (Hulls) did not mean that an adjustment under the York—Antwerp Rules was a condition precedent to the accrual of the insurer’s liability. In the words of his Lordship:® ‘In my judgment, that clause, looking at it for the moment without reference to the Rules themselves, does not say, or mean, that an adjustment under the York—Antwerp Rules 1924 is a condition precedent to the accrual ofthe insurer’s liability. It pre-supposes that liability. It shows that an average adjustment is contemplated by the parties and that the code to be used in ascertaining the amount of the insurer’s liability shall be the code prescribed in the 1924 Rules. It prescribes the method of computing the amount ofliability. It does not say, or imply, that there shall be no liability on the insurer, or that time shall not run, until the amount has been thus computed. As I have mentioned, the computation in the adjustment is in no way binding. It does not operate to fix or settle the amount so that it cannot be disputed.’ But where the parties sign a general average bond, the period of limitation runs from the time when the general average statement has been completed by the average adjuster.’ 20 The contract of affreightment, in fact, provided for adjustment according to the York—Antwerp Rules, 1924. See ibid, at 77. [1963] 2 Lloyd’s Rep at 76. [1853] 13 B&C 864. le Wavertree Sailing Ship Co Ltd v Love [1897] AC 373. [1963] 2 Lloyd’s Rep at 76-77. Ibid, at 77. Ibid, at 77. Dy Sa a Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd, The Potoi Chau [1983] 2 Lloyd’s Rep 376, PC. (See the judgment of Lord Diplock, ibid, at 382-383.) 186 Marine Silks 7 APPLICATION RULES 1974 OF FOREIGN LAW OR YORK-ANTWERP The policy almost invariably provides that either a foreign law or the York—Antwerp Rules 1974 shall apply. Thus, clause 11 of the Institute Time Clauses (Hulls)® states: ‘General average . . . to be adjusted according to the law and practice obtaining at the place where the adventure ends, as ifthe contract of affreightment contained no special terms upon the subject; but where the contract of affreightment so provides the adjustment shall be according to York-Antwerp Rules. When the Vessel sails in ballast, not under charter, the provisions of the York—Antwerp Rules 1974 (excluding Rules XX and XXI) shall be applicable, and the voyage for this purpose shall be deemed to continue from the port or place of departure until the arrival of the Vessel at the first port or place thereafter other than a port or place of refuge or a port or place of call for bunkering only. If at any such intermediate port or place there is an abandonment of the adventure originally contemplated the voyage shall thereupon be deemed to be terminated.’ a Foreign adjustment clause At one time before this clause was adopted, insurers in this country took exception to foreign average statements. Thus, Bailhache J, remarked:? ‘Foreign average statements often included matters as being the proper subject of general average which by Common Law in this country were not included; and underwriters used to say: ‘‘We carry on business in this country. Our contract is English, and we are liable for general average by English Common Law; and the only general average we are obliged to pay is such a general average as is recovered under English law’; and they used to object to foreign statements; and very often there was trouble between them and the assured, the assured having to pay a foreign statement and the underwriter questioned the foreign statement because it was not in accordance with English law. Therefore this clause making a general average payable according to foreign statement was put in; and it was put in in aid of the assured and to prevent these disputes with the underwriters.’ Under such a clause the insurer is not liable until an adjustment has actually been made. Thus, in Brandeis, Goldschmidt & Co Ltd v Economic Insurance Co Ltd‘° a parcel of zinc ore was insured by its owners from Australia to Antwerp or Rotterdam. It was loaded on a German vessel. On the outbreak of the First World War the vessel sought refuge at Syracuse, which was a neutral port. A fire broke out. This constituted a general average loss, and the assured became liable to contribute. The master took from them the ordinary general average bond. The vessel was seized by the Italian Government when Italy came into the war in April 1915. The assured sold the zinc ore and wanted to take delivery ofit, but the Italian Government said that they must pay a deposit of40 per cent ofits value by way ofsecurity against any contribution to which they might be found lable in general average. The assured paid the deposit, and claimed to recover it from the insurers. The policy contained a clause which stated: ‘General average . . . payable according to foreign statement or per York—Antwerp Rules if in accordance with the contract of affreightment.’ 8 Clause 11 is set out in full in Appendix III, pp 533-540, post. ° Brandeis, Goldschmidt & Co Ltd v Economic Insurance Co Ltd (1922) 11 LIL Rep 42 at 44, KBD. 0 (1922) 11 LIL Rep 42, KBD. ; Application offoreign law or York—Antwerp Rules 1974 187 The insurers contended that no foreign statement or statement according to the York—Antwerp Rules had been prepared, and that their liability to repay the deposit did not arise until this had been done. Bailhache J, accepted this contention, and held that the claim failed. His Lordship observed:'' ‘It is quite clear that the amount ofa contribution which persons have to pay towards a general average loss can only be ascertained by adjustment; and inasmuch as an adjustment is necessary to this ascertainment—general average being payable according to foreign statement—it seems to me that I must hold that there is an express provision in the policy which prevents the code applying in its simplicity and prevents the assured from recovering unless and until someone or other has made an adjustment either according to foreign law or according to York—-Antwerp Rules, an adjustment which would show precisely what is the sum payable by these underwriters.’ b The York—Antwerp Rules 1974 The York—Antwerp Rules 1974 are divided into ‘lettered’ and ‘numbered’ rules. These apply to the exclusion of any law and practice inconsistent therewith. Except as provided by the numbered rules, general average must be adjusted according to the lettered rules. 1 The lettered rules The lettered rules provide a definition of a general average act, what losses are allowed, the effect of the fault of one ofthe parties, the onus ofproof, substituted expenses, and the basis of adjustment. DEFINITION OF GENERAL AVERAGE ACT There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose ofpreserving from peril the property involved in a common maritime adventure. '” In Australian Coastal Shipping Commission v Green’? the plaintiffs insured the m v ‘Bulwarra’ and the mv ‘Wangara’ with the defendant underwriter under a marine insurance policy which incorporated the York—Antwerp Rules 1950. The moorings of the ‘Bulwarra’ were carried away on 13 July 1960, in heavy weather. The plaintiffs employed the tug ‘Hero’ on the United Kingdom Standard Towage Conditions to assist her. The tow-rope parted and fouled the ‘Hero’s’ propeller and she became a total loss. Her owners sued the plaintiffs under Condition 1(3), which stated: ‘1 Tpid, at 44. The learned Judge said (ibid, at 45) that he did not approve of the action of the insurers in insisting that there must be a general average statement in a case where the money had been undoubtedly paid and would never be recovered, and there was no doubt that the matter never would be adjusted at all. Counsel, however, indicated (ibid, at 45) that the action had been fought by the insurers on a question of principle as to whether they could be made legally liable to repay the deposit. But he said that he was now instructed to say that they would approach the other underwriters, and were in fact doing so, and no doubt some settlement would be made which would satisfy the assured. His Lordship then said (ibid, at 45) that he was very glad to hear it because it was obviously a loss which ought to fall, with every consideration of fairness on the underwriters. ae Reales Ac 13 [1971] 1 Lloyd’s Rep 16, CA. cy 188 Marine risks ‘The Tugowner shall not, whilst towing, be liable for damage. . . done to the tug. . . or for loss of the tug... and the hirer shall pay for all loss or damage . . . and shall also indemnify the Tugowner against all consequences thereof. ... Provided that any such liability for loss or damage as above set out is not caused by want of reasonable care on the part of the Tugowner to make his tugs seaworthy.’ but the claim was dismissed by the Supreme Court of New South Wales because it had been caused by the tug’s unseaworthiness. The ‘Wangara’ went aground on 18 November 1961 and the plaintiffs hired the tug ‘Walumba’ on the United Kingdom Standard Towage Conditions. The tow-rope parted and fouled the ‘Walumba’s’ propeller. The ‘Walumba’ accepted salvage services from salvors. She was also damaged. The salvors sued the tugowners, who joined the plaintiffs as third parties on the ground that they were liable to indemnify the tugowners. The plaintiffs claimed from the defendant (1) an indemnity in respect of the costs incurred in defending the action brought by the owners of the ‘Hero’; and (ii) an indemnity in respect of over £20,000 made up of(a) the claim by the owners of the ‘Walumba’ for damage to her; (b) the salvage award made in favour of the salvors; and (c) costs. The Court of Appeal’* held that the action succeeded for the employment of the ‘Hero’ and the ‘Walumba’ was a general average act under Rule A of the York—Antwerp Rules. Lord Denning MR, observed:’° ‘The “general average act”’ was I think the contract made by the shipowners with the tug. In each case the vessel was in dire peril and the shipowners called upon the tug for help. If the tug had rendered salvage services on the usual terms of “‘no cure—no pay”’, the contract would undoubtedly have been a “‘general average act”’. Ifthe services had been successful, the owners would have been liable to pay a very high reward: which would count as “‘general average expenditure’. If the services had been unsuccessful, they would have had to pay nothing. . . . Instead ofentering into such a contract, the shipowners made a towage contract on the United Kingdom Standard Towage Conditions. That was a very reasonable contract to make for both sides. It is well known that there is a substantial risk in towage operations that the towrope may break and foul the propeller of the tug: and that, if that happens, the tug may run aground or be damaged and have to be rescued. In a salvage agreement, the tugowners take that risk on themselves in return for the chance of a very high salvage reward. In a hiring agreement, at a fixed rate of hire, they cannot be expected to take the risk on themselves. It is only right and fair that they should ask for and receive an indemnity. The benefit to the shipowners is that, if the service is successful, he pays much less than he would under a salvage award: but, in return, he has to give an indemnity to the tugowner. In these circumstances, I have no doubt that the towage contract is a “general average act”’. It was intentionally and reasonably made for the common safety.’ He then went on to state’®° that the costs in defending the action brought by the owners of the ‘Hero’ and the expenditure incurred in relation to the ‘Walumba’ were the direct consequence of the general average act, and could therefore be recovered from the defendant under Rule C.'” ALLOWABLE LOSSES Only such losses, damages or expenses which are the direct consequence of the general average act shall be allowed as general average. Loss or damage '* Lord Denning MR, Phillimore and Cairns LJJ. "> [1971] 1 Lloyd’s Rep 16 at 20. See also the judgment of Phillimore LJ, ibid, at 23, and that of Cairns LJ, ibid, at 25. 16 Tbid, at 22. See also the judgment of Phillimore LJ, ibid, at 23-24, and that of Cairns LJ, ibid, at yey '7 Supra. Application offoreign law or York-Antwerp Rules 1974 189 sustained by the ship or cargo through delay, whether on the voyage or subsequently, such as demurrage, and any indirect loss whatsoever, such as loss of market, shall not be admitted as general average.'® EFFECT OF FAULT Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure, but this shall not prejudice any remedies which may be open against that party for such fault.’ ONUS OF PROOF Z The onus of proofis upon the party claiming in general average to show that the loss or expense claimed is properly allowable as general average.*° SUBSTITUTED EXPENSES Any extra expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided.' BASIS OF ADJUSTMENT General average shall be adjusted as regards both loss and contribution upon the basis of values at the time and place when and where the adventure ends. This rule shall not affect the determination of the place at which the average statement is to be made up.’ i The numbered rules The principal numbered rules concern jettison of cargo, damage by jettison and sacrifice for the common safety, extinguishing fire on shipboard, cutting away wreck, voluntary stranding, salvage remuneration, damage to machinery and boilers, expenses oflightening a ship, ship’s materials and stores burnt for fuel, expenses at a port of refuge, wages and maintenance of the crew in a port of refuge, damage to cargo in discharging, deductions from cost ofrepairs, loss of freight, amount to be made good for cargo lost or damaged by sacrifice, contributory values, undeclared or wrongfully declared cargo. JETTISON OF CARGO No jettison of cargo is to be made good as general average, unless such cargo is carried in accordance with the recognised custom of the trade.* 18 Rule C. 1 Rule D. 20 Rule E. 1 Rule F. 2 Rule G. 3 Rule I. 190 Marine risks DAMAGE AND BY JETTISON SACRIFICE FOR THE COMMON SAFETY Damage done to a ship and cargo or either of them, by or in consequence of a sacrifice made for the common safety, and by water which goes down a ship’s hatches opened or other opening made for the purpose of making a jettison for the common safety, must be made good as general average.* EXTINGUISHING FIRE ON SHIPBOARD Damage done to a ship and cargo, oY either of them, by water or otherwise, including damage by beaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall be made good as general average. But no compensation is made for damage by smoke or heat however caused.” CUTTING AWAY WRECK Loss or damage caused by cutting away wreck or parts of the ship which have previously been carried away or are effectively lost by accident, are not made good as general average.° VOLUNTARY STRANDING When a ship is intentionally run on shore for the common safety, whether or not she might have been driven on shore, the consequent loss shall be allowed in general average.’ SALVAGE REMUNERATION Expenditure incurred by parties to the adventure on account of salvage,°® whether under contract or otherwise, is allowed in general average to the extent that the salvage operations were undertaken for the purpose of preserving from peril the property involved in the common maritime adventure. DAMAGE TO MACHINERY AND BOILERS Damage caused to machinery and boilers of a ship which is ashore and in a position of peril, in endeavouring to refloat, are allowed in general average when shown to have arisen from an actual intention to float the ship for the common safety at the risk of such damage.'° But where a ship is afloat, no loss or damage caused by working the propelling machinery and boilers is in any circumstances to be made good as general average.'! EXPENSES OF LIGHTENING When a ship is ashore and cargo and ship’s fuel and stores or any of them are Rule II. a Rule III. Rule IV. Rule V. As to salvage, see pp 192-194, post. Rule VI. Rule VII. Ibid. TS FF Se OO Dw WA —- Application offoreign law or York—Antwerp Rules 1974 191 discharged as a general average act, the extra cost of lightening, lighter hire and reshipping (if incurred), and the loss or damage allowable as general average.'? SHIP’S MATERIALS AND STORES BURNT FOR sustained thereby, are FUEL Ship’s materials and stores, or any of them, necessarily burnt for fuel for the common safety at a time of peril are allowed as general average, when and only when an ample supply of fuel had been provided.'? But the estimated quantity of fuel that would have been consumed, calculated at the price current at the ship’s last port of departure at the date of her leaving, must be credited to the general average.'* EXPENSES AT PORT OF REFUGE 4 When a ship has entered a port or place of refuge, the expenses ofentering it are admitted as general average.” When she sails from there with her original cargo, or part of it, the expenses of leaving the port are also admitted as general average. The cost of handling on board or discharging cargo, fuel or stores whether at a port or place ofloading, call or refuge are admitted as general average when the handling or discharge was necessary for the common safety or to enable damage to the ship caused by sacrifice or accident to be repaired, if the repairs were necessary for the safe prosecution of the voyage.” WAGES AND MAINTENANCE OF CREW IN PORT OF REFUGE Wages and maintenance of master, officers and crew reasonably incurred and fuel and stores consumed during the prolongation of the voyage occasioned by a ship entering a port or place of refuge or returning to her port or place of loading are admitted as general average when the expenses of entering the port or place are allowable in general average in accordance with Rule X.’® DAMAGE TO CARGO IN DISCHARGING Damage to or loss of cargo, fuel or stores caused in the act of handling, discharging, storing, reloading and stowing must be made good as general average, when and only when the cost of those measures respectively is admitted as general average.'? DEDUCTIONS FROM COST OF REPAIRS In adjusting claims for general average, repairs to be allowed in general average are not subject to deductions in respect of ‘new for old’ where old 12 Rule VIII. 13 Rule IX. Sea Tibic: 'S Rule X. 1© 17 18 1 Tbid. Thid. Rule XI. Rule XII. 192 Marine risks material or parts are replaced by new unless the ship is over 15 years old in which case there is a deduction of one-third.*° LOSS OF FREIGHT Loss of freight arising from damage to or loss of cargo are to be made good as general average, either when caused by general average, or when the damage to or loss of cargo is so made good.' . AMOUNT TO BE MADE GOOD FOR CARGO LOST OR DAMAGED BY SACRIFICE’ The amount to be made good as general average for damage to or loss of cargo sacrificed is the loss sustained thereby, based on the value at the time of discharge ascertained from the commercial invoice rendered to the receiver or if there is no such invoice, from the shipped value.* CONTRIBUTORY VALUES The contribution to a general average must be made upon the actual net value of the property at the termination of the adventure. To these values must be added the amount made good as general average for property sacrificed, if not already included, deduction being made from the shipowner’s freight and passage money at risk of such charges and crew’s wages as would not have been incurred in earning the freight had the ship and cargo been totally lost at the date of the general average act, and have not been allowed as general average.°* UNDECLARED OR WRONGFULLY DECLARED CARGO Damage or loss caused to goods loaded without the knowledge of the shipowner or his agent or goods wilfully misdescribed at time of shipment are not allowed as general average, but such goods remain liable to contribute, if saved.* E SALVAGE The insurers are usually liable under the policy for the payment of salvage and for salvage charges.” 1 SALVAGE CHARGES The Marine Insurance Act 1906, s 65(1) states: ‘Subject to any express provision in the policy, salvage charges incurred in preventing a loss by perils insured against may be recovered as a loss by those perils.’ The expression ‘salvage charges’ is defined in s 65(2) in the following terms; ?° Rule XIII. " Rule XV. ? Rule XVI. > Rule XVII. * Rule XIX. ° Eg as in the Institute Time Clauses (Hulls), cl 11. See p 176, ante. Application offoreign law or YorkK—Antwerp Rules 1974 *“Salvage charges’ means the charges recoverable under maritime law 193 by a salvor independently of contract. They do not include the expenses of services rendered by the assured or his agents, or any person employed for hire by them, for the purpose ofaverting a peril insured against. Such expenses where properly incurred, may be recovered as particular charges® or as a general average loss’ according to the circumstances under which they were incurred.’ Accordingly, where a ship is salved by salvors who intervene voluntarily and not under contract, the insurer is under no liability to pay any sum in excess of the sum insured. Thus, in Aitchison v Lohre® a vessel was insured for £1,200 and was salved by salvors with whom no contract was made. They obtained a salvage award for £800. The assured elected to repair the vessel and the cost of the repairs came to £1,200. He claimed an indemnity in respect of this amount and also of the salvage award. It was held by the House of Lords that the insurer was only hable to pay the £1,200 as this was the full sum insured. But if the salvage services are rendered under a contract, any sum which the assured is liable to pay for them may be recovered under the ‘sue and labour’ clause’ in addition to the sum insured, for the salvors are in that case the ‘factors, servants and assigns’ of the assured within the meaning of that clause. 2 LIFE SALVAGE Until 1854 a salvor who had saved lives alone and had not rendered a salvage service to a vessel or her cargo, was not entitled to a salvage award. But in 1854 the Merchant Shipping Act of that year enabled him to claim one. The relevant provision of that statute is now re-enacted in the Merchant Shipping Act 1894, so44e? Where a salvor rendered services to the vessel and her cargo and also to lives, it was always the practice of the Admiralty Court to give him an enhanced award, the enhancement being a reflection of the value of the services rendered in the saving of life. In Nourse v Liverpool Sailing Ship Owners Mutual Protection and Indemmty Association’ ’ the question arose as to whether an assured, who was liable to pay a salvage award to a salvor in respect of life salvage only, could claim an indemnity from the insurer under a Lloyd’s policy. Mathew J, held that he © This term is defined by s 64(2) of the Marine Insurance Act 1906 in the following way: ‘Expenses incurred by or on behalf of the assured for the safety or preservation of the subject- matter insured other than general average and salvage charges are called “‘particular charges’’.’ See generally p 417, post. This term is defined by s 66(1) of the Marine Insurance Act 1906 in the following way: ‘A general average loss is a loss caused by or directly consequential on a general average act. It includes a general average expenditure as well as a general average sacrifice.’ See pp 344-345, post. 8 (1879) 4 App Cas 755, HL. As to the ‘sue and labour’ clause, see pp 442-452, post. Section 544(1) states: ‘Where services are rendered wholly or in part within British waters in saving life from any British or foreign vessel, or elsewhere in saving life from any British vessel, there shall be payable to the salvor by the owner of the vessel, cargo, or apparel saved, a reasonable amount of salvage, to be determined in case of dispute in manner hereinafter mentioned.’ ‘1 [1896] 2 QB 16. 194 Marine risks could not, and, after referring to the position before the Merchant Shipping Act 1894 had been enacted, observed:'* ‘There is nothing to show that the statutes were intended to impart any new meaning to the policy of marine insurance, which existed long before the legislation in favour of salvors of lifesie This decision was subsequently affirmed’? by the Court of Appeal.'* In Grand Union (Shipping) Ltd v London SS Owners’ Mutual Insurance Association Ltd, The Bosworth (No 3)'° the material facts were different because the salvors had rendered salvage services to a ship and her cargo in distress in the North Sea, and saved the lives of all her crew. McNair J, held that the salvage award in respect of both lives and property which the salved vessel had to pay was recoverable from the insurers under a Lloyd’s policy. In the words of his Lordship:'° ‘The plaintiffs are not entitled to recover any part of the Wolverhampton Wanderers award from the club for the simple reason that it is recoverable under the terms of Lloyd’s policy. It is true, of course, that the construction may involve a slight forcing of the language of s 65 of the Marine Insurance Act 1906, because salvage, of course, is covered under a Lloyd’s policy not by reason of any express provision in the policy but by reason of the Common Law now embodied in the Marine Insurance Act 1906. Section 65(1) of the Marine Insurance Act says this: “Subject to any express provision in the policy, salvage charges incurred in preventing a loss by perils insured against may be recovered as a loss by those perils.” It needs possibly a little stretching of the language to say that a salvage award in so far as it reflects an element oflife salvage gives rise to a charge incurred in preventing a loss by perils insured against. I think the answer to that is that by the practice of the Admiralty Court an award made in these circumstances is treated as being, and is in fact, an award for services rendered to the ship and cargo.’ F OTHER RISKS Other risks which may be insured against include (i) leakage; and (ii) heat, sweat and spontaneous combustion. LEAKAGE As is stated later, the liability of the insurer for leakage is excluded by the Marine Insurance Act 1906, s 55(2)(c).*’ But the risk of leakage can be specially insured against. Thus, in De Monchy v Phoenix Insurance Co of Hartford'® some barrels of turpentine were insured from Jacksonville, Florida, to Rotterdam. The certificate of insurance stated: “To pay leakage from any cause in excess of 1 per ‘2 Thid, at 19. "3 [1896] 2 QB at 21, CA. '* Lord Esher MR, Smith and Rigby LJJ. "S [1962] 1 Lloyd’s Rep 483, QBD (Com Ct). '® Ibid, at 490. "7 See p 256, post. "8 (1929) 34 LIL Rep 201, HL. See also Traders and General Insurance Association v Bankers and General Insurance Co (1921) 9 LIL Rep 223, where a reinsurance policy in respect of aconsignment of soya bean oil contained a clause stating ‘including leakage in excess of 2 per cent over trade ullage’. Leakage 195 cent’. A claim was made against the insurers for loss due to leakage. The insurers denied liability on the ground that ‘leakage’ meant such leakage as was visible on the barrels on discharge. The House of Lords‘? rejected this contention, and held that the claim succeeded. ‘Leakage’ meant any escape of turpentine whether through a hole in the barrel which might or might not be discernible, or through the pores of the material of which the barrel was made. Viscount Dunedin observed :?° “The answer of the underwriters was simple. They said that no leakage could be held as proved which did not leave signs ofiton the cask. That at once raises the question of “‘What is the meaning ofleakage?” Leakage I take to mean any stealthy escape either through a small hole which might be discernible, or through the pores of the material of which the cask is composed. Turpentine has a very great power of penetration. It even penetrates through metal containers, but it evaporates rapidly, and having penetrated it leaves no sign or external mark. It is clear, therefore, that ifthe underwriters’ view were right, there would be no leakage except when an actual hole was shown in the cask. The provision as to an average leakage and the elaborate provision as to comparing the contents ofthe casks on arrival with what they had been at starting, all point clearly to the inadmissibility of such a construction.’ It is not, therefore, surprising that when the case came into Court little or nothing was heard of this defence.’ HEAT, SWEAT AND SPONTANEOUS COMBUSTION In Soya GmbH Mainz Kommanditgesellschaft v White* a cargo of soya beans was insured against the risk of heat, sweat and spontaneous combustion on a voyage from an Indonesian port to Antwerp and arrived in a heated condition. The House of Lords® held that the assured were entitled to an indemnity. Lord Diplock said* that the words ‘heat, sweat and spontaneous combustion’ were words which were descriptive of the perils insured against, not of the loss occasioned by those perils nor of what caused the heat, sweat or spontaneous combustion to occur. ‘Heat’, if it stood alone as descriptive ofa peril, would be equally apt to describe both the heating of the insured cargo from an external source and its becoming hot as a result of some internal chemical, biological or bacterial process taking place in the cargo itself. But ‘heat’ did not stand alone. It appeared in conjunction with two other perils insured against, ‘sweat’ and ‘spontaneous combustion’. ‘Sweat’ meant the exudation of moisture from within the goods to their exterior as a result of something which happened inside them. ‘Spontaneous combustion’ could refer only to a chemical reaction which took place inside the goods, and resulted in their becoming incandescent 19 Lord Hailsham LC, Viscount Dunedin, Viscount Sumner, Lord Buckmaster and Lord Atkin. 20 (1929) 34 LIL Rep 201 at 204. " The clause referred to stated: ‘Where barrels with contents are weighed at a port of shipment and destination, loss, if any, due to leakage shall be ascertained by a comparison ofthe gross shipped and gross landed weights. Where barrels with contents are weighed at port of shipment and contents of barrels only weighed at destination, loss, if any, due to leakage shall be ascertained by a comparison of the gross shipped weight, after deducting 80 lb tare for each barrel, and the net landed weight.’ ? [1983] 1 Lloyd’s Rep 122, HL. The case in the lower courts also concerned an alleged nondisclosure of a material fact. See pp 49-50, ante. 3 Lord Diplock, Lord Keith of Kinkel, Lord Scarman, Lord Roskill and Lord Templeman. * [1983] 1 Lloyd’s Rep at 126. 196 Marine risks or bursting into flames. The two expressions were clearly intended to be descriptive ofparticular kinds of inherent vice. ‘Heat’ appearing in immediate conjunction with them was apt to include heating of the cargo as a result of some internal action inside the cargo itself. The words used displaced the prima facie rule of construction laid down in the Marine Insurance Act 1906, s 55(2)(c)° that the insurer was not liable for ‘inherent vice or nature of the subject-matter insured’. It did so to the extent that such inherent vice consisted of a tendency to become hot, to sweat or to combust spontaneously. To hold otherwise would be contrary to commercial common sense. > See pp 250-256, post. CHAPTER War 15 and strikes risks It may be desirable to insure against the risks of war and/or strikes, liability for which is excluded by a ‘war exclusion clause’? or a ‘strikes exclusion clause’? in most sets of the Institute Clauses. A WAR RISKS The subject of war risks insurance may be considered. ND OF wm 1 generally;* under the Institute Clauses;* in relation to insurance by the State;> and in relation to insurance by mutual insurance associations. 6 GENERALLY The principal risks which are covered by war risks insurance are, of course, war and hostile acts by belligerents. The reported cases, however, deal mainly with the meaning of ‘hostilities’ and ‘warlike operations’ which were the terms used in earlier times. The cases have not principally been concerned with policies incorporating the Institute War Clauses, but are cases dating back to the First World War when merchant vessels were requisitioned by the Government and chartered under a form of charter-party known as “T.99’ under which the marine risks were left with the marine underwriters, and the Government undertook the risk of damage from ‘all consequences ofhostile or warlike operations’. A number of cases decided in the Second World War also interpreted these words where vessels had been similarly requisitioned. The cases concerned the interpretation of war clauses which covered the risks excluded by the ‘free of capture and seizure’ clause which at that time stated: ‘Warranted free of capture and seizure . . . and also from all consequences of hostilities or warlike operations, whether before or after declaration of war.’ Thus, any loss which was the result of hostilities or warlike operations was a " See pp 257, 258, 260, post. 2 See pp 257, 258, 260, post. 3 See pp 197-209, post. * See pp 209-211, post. > See p 211-213, post. © See pp 213-214, post. 197 198 War pee strikes risks war risk and not a marine risk, even though it had not been directly caused by a hostile act by or against a belligerent power, so that if a vessel were lost as a result of coming into collision with a warship, the war risk insurers were liable even if no enemy vessel was involved at all. But the ‘free of capture and seizure’ clause was altered as a result of Yorkshore Dale SS Co Ltd v Minister of War Transport, The Coxwold,’ so that the clause did not exclude ‘contact with any fixed or floating object® .. . stranding, heavy weather or fire unless caused directly (and independently of the nature of the voyage or service which the vessel concerned or, in the case ofa collision, any other vessel involved therein, is performing) by a hostile act by or against a belligerent power . .’ The position therefore was that, a loss which was not directly caused by a hostile act was a marine risk and not a war risk. Consequently a number of the cases considered in the pages which follow have lost their importance, but are still of interest in showing the meaning of the terms ‘hostilities’ and ‘warlike operations’. ‘Hostilities’ The meaning ofthe term ‘hostilities’ was stated by Lord Wrenbury in Britain SS Co Ltd v R® in the following terms:'°® ‘All the decisions have I think proceeded, and in my judgment have rightly proceeded, upon the footing that the word “hostilities” does not mean “‘the existence ofa state of war” but means “acts of hostility” or (to use the noun substantive which follows) “operations of hostility”. The sentence may be read “‘all consequences of operations of hostility (or war) or operations warlike (similar to operations of war) whether before or after declaration of war”. To attribute to the word the longer meaning—namely, “all consequences of the existence of a state of war’’—would give the expression a scope far beyond anything which one can conceive as intended. To define the meaning of“‘operation” in this connection is, no doubt, a matter of great difficulty, and for the purpose of these cases is not, I think, necessary.’ ‘Warlike operations’ t Meaning The meaning of the term ‘warlike operations’ was reviewed by Atkinson J, in Clan Line Steamers Ltd v Liverpool and London War Risks Insurance Association Ltd,*' where he said:'? ‘The conclusion at which I have arrived from a careful examination ofthe authorities to which I have referred is that a warlike operation is one which forms part of an actual or intended belligerent act or series of acts by combatant forces; that part may be performed preparatory to the actual act or acts of belligerency, or it may be performed after the actual act or acts of belligerency, but there must be a connection sufficiently close between the act in question and the belligerent act or acts to enable a tribunal to say with at least some modicum of common 7 [1942] AC 691, HL. Seep 201, post. ® For a case on whether 20 mm shells sucked up by a dredger were ‘fixed or floating objects’, see Costain-Blankevoort (UK) Dredging Co Ltd v Davenport, The Nassau Bay [1979] 1 Lloyd’s Rep 395. See the judgment of WaltonJ, ibid, at 405-406, where the meaning of ‘contact’ was also considered. ? [1921] 1 AC 99, HL. 10 Thid, at 133. ' [1942] 2 All ER 367, KBD. '? Thid, at 374. Generally 199 sense, as Lord Dunedin suggests, that it formed part of acts of belligerency. If military equipment is being taken in a ship to a place behind the fighting front from which the forces engaged, or about to be engaged on that front, may be supplied, that ship may beyond question be said to be taking part in a warlike operation. If a ship is bringing home such equipment after it has been employed on a fighting front, or had been lying available for and at the service ofa fighting front, again beyond question, in view ofthe decisions, she is taking part in a military operation.’ ti Examples of ‘warlike operations’!* In A-G v Ard Coasters!* the House of Lords!> held that a vessel, which was run down by a warship patrolling in the North Sea, was lost as a consequence of a ‘warlike operation’. ‘ In Caroline (Owners) v War Risk Underwriters'® an armed trawler was leading a convoy at night. She blew up as a result of the explosion of amine or torpedo. In the confusion two other vessels in the convoy came into collision. Shearman J, held that the armed trawler was engaged in a warlike operation, and the collision was a direct result of it. In Liverpool and London War Risks Insurance Association v Marine Underwriters of SS Richard de Larrinaga’’ a vessel was proceeding in convoy, and came into collision with a warship, which was on her way to pick up a convoy. The House of Lords held that at the time of the collision, the warship was engaged in a ‘warlike operation’, and the collision was a consequence of that operation. No distinction could be drawn between proceeding under orders to a spot to carry out a ‘warlike operation’ and the actual carrying out ofthe ‘warlike operation’. Both formed part of the ‘warlike operation’. In Atlantic Transport Co v R: The Maryland'® a vessel, which had been to Salonika with a cargo of horses and stores for the use of the forces there, was proceeding from Salonika to Algiers for bunkers and thence to Gibraltar for orders. She collided with another vessel, which was on a voyage to Salonika with a cargo of frozen meat for the forces. Both vessels were steaming without lights in accordance with Admiralty instructions. It was held that, although sailing without lights was not in itselfa ‘warlike operation’, both vessels were engaged in a ‘warlike operation’. In Hindustan Steam Shipping Co v Admiralty Comrs'? a vessel was loaded with a cargo of steam coal, and was sent to Malta and then to Tenedos. She was employed there as a supply ship for submarines. Her master drew the attention of the naval authorities to the danger of leaving a cargo of steam coal in the hold for an indefinite time. Fire broke out in the hold, and she suffered damage. It was held that although spontaneous combustion of coal was a marine risk, a "3 Cases concerning war risk clauses decided in the United States courts include: Link v General Insurance Co of America, The Eastern Prince (1944) 77 LIL Rep 431, District Court for the Western District of Washington (Northern Division); Standard Oil Co of New Jersey v United States, The John Worthington [1951] 2 Lloyd’s Rep 36, United States Supreme Court; Republic ofChina, China Merchants Steam Navigation Co Ltd and United States of America v National Union Fire Insurance Co of Pittsburgh, Pennsyluania, The Har Hsuan [1958] 1 Lloyd’s Rep 351 (US Court of Appeals). 4 [1921] 2 AC 141, HL. 'S Viscount Finlay, Lord Dunedin, Lord Sumner, Lord Parmoor and Lord Wrenbury. © (1921) 7 LIL Rep 56, KBD. '7 (1921) 7 LIL Rep 151, HL. 18 (1921) 9 LIL Rep 370, KBD. 19 (1921) 8 LIL Rep 230, KBD. 200 War ani strikes risks new risk had come into existence when the vessel became a combatant ship. The fire was the proximate and direct result of the new risk, and was a consequence of ‘hostilities or warlike operations’. In Charente SS Co v Director of Transports*® a collision occurred between a merchant vessel and a vessel being used as a troopship to carry American forces from the United States to Europe. Both vessels were sailing without lights in accordance with Admiralty instructions. No negligence on the part of either master was established. The Court of Appeal’ held that the loss was a consequence of ‘hostilities or warlike operations’. In Peninsular and Oriental Branch Service v Commonwealth Shipping Representative: The Geelong” a vessel was carrying ambulance wagons and other Government stores from Mudros to Alexandria when she was involved in a collision. The House of Lords* held that she was engaged in a ‘warlike operation’. In Adelaide SS Cov R* a hospital ship carrying wounded men was involved in collision. The House of Lords°® held that she was engaged in a ‘warlike operation’. In Mazarakis Bros v Furness, Withy & Co® a vessel while proceeding on a voyage from Huelva to Nantes collided with a warship. The Court of Appeal’ held that the warship was engaged in a ‘warlike operation’ at the time of the collision. In Eagle Oil Transport Cov Board of Trade® a vessel was employed by the British Government in carrying oil fuel for the British fleet. While manoeuvring inside the boom defences of Invergordon Harbour, she collided with a Government oil tanker. Rowlatt J, held that she was engaged in a ‘warlike operation’. In Board of Trade v Hain SS Co? a vessel was employed as a mine-layer in the United States Navy. Whilst returning from a European port to the United States with 720 mines on board, she collided with another vessel on 25 December 1918 (shortly after the Armistice). The House of Lords’® held that she was engaged in a ‘warlike operation’. In Athel Line Ltd v Liverpool and London War Risks Insurance Association Ltd'' a vessel was carrying a full cargo ofoil from Trinidad to naval bases at Loch Alsh and Scapa Flow. She was instructed to anchor at Loch Alsh to await orders to discharge. She was holed by sitting on a rock while swinging to her anchor. The Court of Appeal‘? held that she was engaged in a ‘warlike operation’, and that the damage arose as a consequence of that operation. The anchoring of the vessel at the time and place in question was an essential part of the operation, and the fact that she had anchored in the course of her voyage did not ofitself suspend the ‘warlike operation’. 20 (1922) 10 LIL Rep 514, CA. Bankes, Warrington and Scrutton LJJ. (1922) 13 LIL Rep 230 at 455, HL. Viscount Cave LC, Lord Finlay, Lord Dunedin, Lord Atkinson and Lord Sumner. (1923) 14 LIL Rep 341 at 549, HL. Viscount Cave LC, Lord Shaw, Lord Sumner, Lord Parmoor and Lord Wrenbury. (1924) 18 LIL Rep 152, CA. Bankes, Scrutton and Sargant LJJ. (1925) 23 LIL Rep 301, KBD. [1929] AC 534, HL. YI WN Dun oe Lord Buckmaster, Viscount Dunedin, Atkin. Lord Sumner, Lord Warrington of Clyffe and Lord "! [1946] KB 117, [1945] 2 All ER 694, CA. Lord Greene MR, MacKinnon and Tucker LJJ. Generally 201 In Yorkshire Dale SS Co Ltd v Minister of War Transport, The Coxwold'? it was admitted that a vessel, which was carrying petrol for the use of HM forces, was engaged in a ‘warlike operation’ at the time of her stranding near the Damsel Rocks near the Isle of Skye. Lord Wright in giving judgment in the House of Lords said:'* “Under certain circumstances, a trading or merchant vessel has been held to be for purposes of the war risk clause engaged in a warlike operation. As illustrative of these circumstances, I may take those ofa merchant ship carrying troops, ammunition, guns, tanks, or other military machines or equipment to a theatre of war, or away from a theatre of war, as in the evacuation of the British forces from Norway, Greece or Crete or elsewhere. Such a vessel may be regarded pro hac vice as serving the belligerent purposes of the country and as taking her share in hostilities against the enemy. She is therefore, it is said, to be deemed to be engaged on a warlike operation within the meaning ofthe war risk cover; so it has been laid down by this House under T 773 or T 99, the charter-party used in the last war. If that vessel is lost or damaged or damages other vessels by reason ofthe acts which she does in executing the warlike operation, the loss or damage is held to be by a consequence of the warlike operation.’ Lord Porter said:!* ‘If the Coxwold had been on an ordinary mercantile voyage, no doubt, as a result of the decisions in your Lordships’ House, the risk would be a marine one, whether its cause was absence oflights or sailing in convoy or obeying the orders of the commodore vessel or inability to see the Neist Light because it was dimmed. But in the circumstances the cause of the Coxwold being at that place at that time in those conditions was her warlike operation and the loss was in my view not only in the course of but caused by that operation.’ In Liverpool and London War Risks Insurance Association Ltd v Ocean SS Co Ltd'® a vessel sailed from Liverpool for Alexandria on 2 December 1942, with a cargo of war stores. The urgency of the voyage necessitated the carriage of a heavy deck cargo. Very heavy weather was experienced resulting in the deck cargo breaking adrift and causing damage. The House of Lords'’ held that the vessel was engaged in a ‘warlike operation’, which had resulted in the damage done by the deck cargo. ut Examples of operations held not to be ‘warlike’ In Harrison’s Ltd v Shipping Controller'® a vessel was loaded with hospital stores for the British Government, and had on board a few British troops and officers. She sailed from Salonika to Taranto, and whilst in the vicinity of Taranto was ordered to follow a pilot escort into Taranto harbour. Her master lost sight of the pilot escort’s lights, and, seeing a red light on his port bow, put the helm to port and she was stranded. McCardie J, held that she was not engaged in a ‘warlike operation’ because the dominant features ofthe ship and the dominant object of her voyage must be looked at. It could not be said that the presence of a few soldiers on board, whether wounded or unwounded, turned a merchant ship into a transport, or changed an otherwise peaceful voyage into a ‘warlike operation’. '3 [1942] AC 691, HL. 14 Thidwat lil: 1S Thbid, at 16. '6 11948] AC 243, [1947] 2 All ER 586, HL. 17 Lord Thankerton, Lord Wright, Lord Porter, Lord Uthwatt and Lord Normand. 18 [1920] 1 KB 122, KBD. 202 War ate strikes risks e In Admiralty Comrs v Brynawel SS Co'? a collier was damaged by bumping up against a minesweeper which she was coaling. The minesweeper was taking in coal preparatory to resuming minesweeping operations. Rowlatt J, held that she was not engaged in ‘warlike operations’. In Wynnstay SS Co v Board of Trade*® a vessel was at anchor off Staten Island, and was in ballast inward bound to load a cargo ofgrain for carriage to France. She collided with another vessel also at anchor, which was also in ballast inward bound after supplying a cargo of fuel oil to units of the US Fleet in European waters. At the time of the collision she had been requisitioned by the US Government, and was commanded by US Naval officers. RowlattJ,held that the collision had not resulted from a ‘warlike operation’, and said:! ‘The cases have gone a long way in giving a wide meaning to the words ‘‘warlike operation”, but I cannot conceive anyone saying that this injury was in consequence of a warlike operation. If you can say that when once a vessel becomes a unit ofa belligerent navy, either as a fighting ship or as a ship supporting the fighting ships by way of supply, that from that time her whole life is one continuous warlike operation, then I think the award in this case would be wrong. But I think you would have to go as far as that in order to quarrel with this award, because here she had carried oil, was prepared to carry it again, and might carry it either for a warship or for anybody else. But she was not carrying it, and she was not going anywhere to fetch it. She had come back, and was lying at anchor awaiting orders. As pointed out by the Attorney-General, if she had been told, instead of dropping her anchor, to go into dock, and it had happened on the way to dock, it is contrary to the meaning of the words to say that she was engaged in a warlike operation. She was waiting there to see what was to be done with her next. I cannot see that she was engaged operation.’ in any warlike In J Wharton (Shipping) Ltd v Mortleman’ a requisitioned vessel was bound for Southampton for orders. It was the Government’s intention to employ her for the transport of Army equipment to a war base. Her master was unaware of the purpose for which she would be used. She collided with another vessel. The Court of Appeal? held that she was not engaged in a ‘warlike operation’ MacKinnon LJ, said:* ‘There are dicta to the effect that, when a warship is proceeding to the scene of warlike operations, although at the moment she is not actually engaged in them, none the less during that preliminary passage to the scene of warlike operations she is herself exercising a warlike operation. No doubt that is perfectly correct, but it seems to me to have no bearing upon this totally different question as regards this purely commercial vessel, which was engaged at the time ofthe disaster in question in a purely commercial and unwarlike operation, and I am quite satisfied that, ifthe authors of those dicta to which I have referred had had this particular problem brought to their attention, and if they had been asked whether they would come to the same conclusion in such a case, they would readily, and with some asperity perhaps, have said that that wasa totally illegitimate extension of anything which they intended to say, anda quite improper inference.’ In Clan Line Steamers Ltd v Liverpool and London War Risks Insurance Association Ltd® the insured vessel was on a voyage from Liverpool to Rouen and Dunkirk, a ‘9 (1923) 17 LIL Rep 89, KBD. 20 (1995) 23 LIL Rep 278, KBD. ' Ibid, at 279. ? [1941[ 2 KB 283, [1941] 2 All ER 261, CA. > MacKinnon and Luxmoore LJJ, and Stable J. * [1941] 2 All ER 261 at 263. > [1943] KB 209, [1942] 2 All ER 367, KBD. Generally 203 and was carrying steel rounds for the making of shells intended for the French Ministry of Munitions. She came into collision with another vessel in the English Channel. Atkinson J, held that she was not engaged in a ‘warlike operation’, and said:° ‘To hold that to carry steel rounds on behalf of the French Armament Mission from Manchester to a port mainly used for commercial purposes (albeit also at times used for receiving supplies of munitions of war) for the purpose of carriage to some factory or factories doubtless to be chosen because oftheir distance from the fighting front is a warlike operation would be to hold something which, in my judgment, would be completely out of harmony with the substance of everything said since Britain SS Co Ltd v R.’ The cargo was not yet military equipment. I do not say that that is in itself conclusive. It is unnecessary so to decide. Army workshops may for all I know have to handle much material not yet in its final usable form, but it was not destined for a force in the field, only for a factory; it was not being carried to a place where it would be available for an army in the field; that is, an army engaged in or about to engage in acts of belligerency; it was not connected with any belligerent act or acts ofany army in being; and, in my judgment, it is outside everything indicated in the cases to which I have referred.’ In Costain-Blankevoort (UK) Dredging Co Ltd v Davenport: The Nassau Bay® a dredger was engaged in a dredging operation off the coast of Mauritius when she sucked up a number of 20 mm Oerlikon shells, which had been dumped in the sea by the British armed forces at the end of World War II. An explosion in the dredger’s discharge pump occurred and she sank. Her owners collected the insurance money in respect of her. The Special Commissioners held that a balancing charge of £607,433 under the Capital Allowances Act in respect of that sum would be imposed in an assessment to corporation tax. The owners appealed on the ground that they were entitled to rely on the exemption given by s 33(7) of the Act, which stated: ‘Where the loss ofa ship is due to a war risk connected with any war in which His Majesty was engaged on 15 June 1945, then, notwithstanding that the loss occurs after the conclusion of. . . that war, no balancing charge shall be made by reason ofthe loss in respect of expenditure on the ship.’ That subsection said that ‘war risk’ meant any risk falling within the definition of ‘war risk’ contained in the form of policy set out in Sch | to an agreement for reinsurance of British ships made by the Minister of War Transport on 16 September 1943. That form stated that ‘war risk’ meant ‘The risks of war which would be excluded from an ordinary English policy of marine insurance by the following, or similar, but not more extensive clause: “‘Warranted free of the consequences of hostilities or warlike operations ...”’.9 Walton J, held that the appeal would be dismissed. The dumping of the ammunition was the very reverse of a warlike operation. It involved the very opposite for it was the destruction of war stores which was surely an act of pacification.° Ibid, at 374. (1921) lt AG 99; HL: [1979] 1 Lloyd’s Rep 395. Ibid, at 405. His Lordship, however, said ibid, at 405 that the dumping might have been a oarnna 0 ‘warlike operation’ if eg Mauritius had been about to be overrun by enemy forces and ammunition and all kinds of other warlike stores had been dumped in the sea so as to deny their use to the enemy, but there was not the slightest evidence of anything so dramatic in the present case. 204 War ae strikes risks ‘Consequences of hostilities or warlike operations’ In order to recover under a war risks policy the assured must show that the loss has occurred as a consequence of ‘hostilities or warlike operations’. In Moor Line v King and United Kingdom Mutual War Risks Association'® a vessel was lost by stranding. The marine risk underwriters denied liability, and contended that this was due to her altering course to avoid a floating mine, and was therefore the consequence of a warlike operation. It was held that the loss was due to negligent navigation, so the war risk insurers were not liable and the loss fell upon the marine risk underwriters. In Larchgrove (Owners) v R'' a vessel collided with an American cargo ship, which had been chartered to the US Navy and manned by naval ratings, and was carrying munitions from the United States to France. Roche J, held that the loss was a marine risk. The collision had been caused solely by the American vessel. The negligence on the part of those navigating her was a lapse by them as ordinary seamen, and not in their capacity of members of the US armed forces. She was not engaged as a warship at the moment ofthe collision, but was only a cargo ship. In Britain SS Co v R'* two vessels were proceeding without lights in accordance with instructions issued by the Admiralty and came into collision. No evidence was given at the trial of the presence in the neighbourhood of any enemy or friendly warship. The House of Lords’? held that in the circumstances sailing without lights was neither a warlike operation nor was the collision the consequence of one. In Green v British Indian Steam Navigation Co'* a vessel was sailing on convoy. She zigzagged in accordance with the orders of the officer in charge of the escorting warships. She stranded and became a total loss. The loss took place in the Mediterranean in an area known to be infested with enemy submarines. But there was no evidence ofthe presence of asubmarine at the time ofthe loss. It was held by the House of Lords'® that the loss was not the consequence of a ‘warlike operation’. In Clan Line Steamers Ltd v Board of Trade’® an insured vessel proceeding in convoy, and carrying stores for the civil commissariat and stores for the military authorities from New York to Nantes, collided with another vessel, which was carrying a cargo entirely made up ofwar stores. It was admitted that the other vessel was engaged on a warlike operation. The collision was found to be due to the breakdown ofthe steering gear ofthe insured vessel. The House of Lords'’ held that the loss was therefore not a consequence of a ‘warlike operation’. Lord Hailsham LGC, observed:'® *© (1920) 4 LIL Rep 286, KBD (Com Ct). "! (1919) 36 TLR 108, KBD. ‘2 [1921] 1 AC 99, HL. '3 Viscount Cave, Lord Atkinson, Lord Shaw, Lord Sumner and Lord Wrenbury. ‘# [1921] 1 AC 99, HL. The case was tried together with Britain SS Co v R, supra. * Viscount Cave, Lord Atkinson, Lord Shaw, Lord Sumner and Lord Wrenbury. *© (1929) 34 LIL Rep 1, HL. Lord Hailsham LC, Viscount Sumner, Lord Buckmaster, Lord Blanesburgh Warrington of Clyffe. "8 (1929) 34 LIL Rep 1 at 5. and Lord Generally 205 ‘In the present case the facts found by the arbitrator show that the collision was due, and was due solely, to the breakdown ofthe steering-gear of the Clan Matheson. From the moment that that breakdown occurred nothing which could be done by those in charge of either vessel could prevent the collision, and in my opinion in law as well as in ordinary parlance the collision was the consequence of that breakdown. The conclusion which I have reached is supported by the high authority of Lord Sumner in The Warilda, to which I have already referred. Lord Sumner says, [1923] AC at 305; 14 LIL Rep at 552: ‘When damage is done by two ships coming into collision, one being engaged in a warlike operation, and the other on an ordinary commercial voyage, the collision is a risk falling on the marine policy, unless it is taken out of it by being proved to be caused by warlike operations, and this proof fails, when it is shown to be caused by the action of the officer in charge of the commercial operation, all the more so if his action is negligent and blameworthy; but I think the result would be the same, if his action was only an error of judgment or wrong but excusable in what is called the agony of the moment, so long as it is his action that causes the collision effectively and proximately, for the Shiokusaged in the warlike operation may play a minor part, since it takes two to make a collision.” ’ In Yorkshire Dale SS Co Ltd v Minister of War Transport: The Coxwold'® a vessel, carrying petrol for HM forces stranded near the Damsel Rocks on the Isle of Skye. She was in convoy and was following a zigzag course, but lost touch with the rest of the convoy. There was an unexpected and unexplained tidal set, which carried her some miles off course and she took the ground. The House of Lords”° held that the effective and predominant cause ofthe stranding was the warlike operation’ on which the vessel was engaged. Viscount Simon LG, said:? ‘It is not correct to say that, because a vessel is engaged in a warlike operation, therefore everything that happens to her during her voyage is proximately caused by a warlike operation or is a proximate consequence ofa warlike operation. Neither is it correct to say that because the accident is of a kind which arises from a marine risk (eg stranding or collision), therefore the particular accident can in no circumstances be regarded as the consequence ofa warlike operation. The truth lies between these two extremes. It seems to me that there is no abstract proposition, the application of which will provide the answer in every case, except this: one has to ask oneself what was the effective and predominant cause ofthe accident that happened, whatever the nature of that accident may be. It is well settled that a marine risk does not become a war risk merely because the conditions of war may make it more probable that the marine risk will operate and a loss will be caused. It is for this reason that sailing without lights, or sailing in convoy, are regarded as circumstances which do not in themselves convert marine risks into war risks. But where the facts as found by the Judge establish that the operation of a war peril is the ‘proximate’ cause of the loss in the above sense, then the conclusion that the loss is due to war risk follows.’ Lord Atkin observed :* ‘Ifin the course ofa warlike operation the direction ofthe ship’s course against another ship is a consequence of a warlike operation (A-G v Ard Coasters [1921] 2 AC 141), it is surely impossible to distinguish the case where the course ofthe ship is directed against a rock, and this whether negligently or without negligence, and whether the ship is deflected by tide or current or wind.’ Lord Macmillan stated :* "9 (1942) 73 LIL Rep 1. 2° o Viscount Simon LC, Lord Atkin, Lord Macmillan, Lord Wright and Lord Porter. The fact that she was engaged in a ‘warlike operation’ was admitted. (1942) 73 LIL Rep | at 6. Ibid, at 7. Ibid, at 8. See also the speeches of Lord Wright, ibid, at 11, and of Lord Porter, ibid, at 14-16, PF wne especially at 14, where he summarises the effect of a number of the relevant decisions. 206 War py strikes risks ‘The learned arbitrator has found that the casualty suffered by the ““Coxwold” was “the direct consequence of the warlike operation” in which she was engaged. Your Lordships have therefore only to decide whether that conclusion is justified on the facts which the arbitrator has found and set out in the case which he has stated. These facts have been narrated by the Lord Chancellor, and, in my opinion, they justify the arbitrator’s conclusion. I think that the ordinary man if asked what caused the casualty would reply that it was by the vessel, in obedience to orders from the commodore ofthe convoy, deviating from a safe course in order to avoid a suspected enemy submarine. It is true that there was an unexpected tidal set which contributed to carry the vessel to the eastward, but there is no finding that this tidal set would have caused the stranding apart from the change ofcourse. Certainly the vessel would not have gone ashore where she did but for the order which she received and obeyed to change her course to the eastward to avoid apprehended enemy action.’ In Liverpool and London War Risks Insurance Association Ltd v Ocean SS Co Ltd,” where a vessel was carrying war stores from Liverpool to Alexandria, the House of Lords® held that damage due to the maintenance of high speed and zigzagging in heavy weather to avoid enemy submarines was not a consequence ofa ‘warlike operation’, for the damage was not shown to be due to anything more than bad weather aggravated by war conditions. Lord Porter observed:’ ‘As Lord Wright pointed out in The ‘Coxwold’,® the basis of the decisions seems to be that the casualty can be traced to definite action on the part of those on board the quasi-warship in directing the course ofthe vessel to carry out the warlike operation. That direction may take her into collision with another vessel or on to a rock, but incidents may occur in the course of the voyage without being caused by such definite action on the part ofthose directing it. In the case of stranding or collision the progress of the ship brings her on to the rock or into the other vessel. The rock does not move; it is static. If the other vessel runs into her and it is that vessel’s action which causes the injury, it is the progress of that ship and not that of the damaged vessel which causes the injury, and whether that injury is a war or marine loss depends on whether the other ship, not the damaged vessel, is engaged on a warlike operation or on an ordinary mercantile adventure. Where the ship is struck and injured by the sea, in substance it is not the movement of the vessel, but the motion of the sea which causes the damage. The doctrine has never been extended to cover mere sea damage without more. Possibly, it may cover a case where the ship is pressed into the sea for war purposes, but that isa deliberate extension ofthe risk in order to assist in the war effort. No such act was done in the present case, and damage caused by the force of wind or sea is not, in my view, war damage even though it would not have occurred if the vessel had not zigzagged or kept her speed, provided, of course, that her action in doing so did not differ from that which a ship carrying an ordinary mercantile cargo would undertake in the conditions of war.’ In Willis SS Co Ltd v United Kingdom Mutual War Risks Association Ltd? the insured vessel was carrying Army stores from Barry to the Middle East via the Cape of Good Hope. She arrived at Durban on her outward voyage with damage in the vicinity of her tailshaft. The shaft was found to be misaligned, and the rivets were renewed. Further repairs were effected at Durban on her homeward voyage. The lignum vitae lining in the tailshaft was found to be excessively worn down, and the assured contended that this was due to the maintenance of high speed during heavy weather causing excessive vibration and consequent misalignment of the propeller shaft. Lewis J, held that the vessel was engaged on a warlike operation, but that > [1947] 2 All ER 586, HL. © Lord Thankerton, Lord Wright, Lord Porter, Lord Uthwatt and Lord Normand. 7 [1947] 2 All ER 586 at 598. 8 (1942) 73 LIL Rep 1, HL. ° (1947) 80 LIL Rep 398, KBD. Generally 207 the damage was not a consequence of that operation. It was due solely to the faulty lignum vitae lining in the tailshaft. He observed:!° ‘In the view that I have formed, and on the evidence before me, I am unable to find that any undue or excessive vibration was set up as a consequence of a warlike operation which aggravated the already existing damage. If I were satisfied that the manoeuvring of the ship as one of the essential parts of the warlike operation had been responsible, though even only responsible by contributing in causing excessive vibration, and that the true cause of the damage was not solely the defective lignum vitae, I should on the authorities have been bound to find in favour of the plaintiffs; but on the facts I have found I am of the opinion that this action fails.’ Proof of loss or damage by war risks!’ Whether a vessel has been lost by a war risk or by a marine risk is a matter of fact, and the burden of proof of loss lies on the assured. In General Steam Navigation Co Ltd v Janson'* the ‘Oriole’ left London for Havre in a seaworthy condition on 29 January 1915. She was last seen off Dungeness on 30 January. On that day two other vessels had been torpedoed off Le Havre by an enemy submarine. Bailhache J, held that on the evidence!? she had been lost by a war risk. Three of her lifebuoys were picked up on 6 February at Rye, Dymchurch and Hastings. A bottle containing a General Steam Navigation Co Ltd’s envelope with the words ‘Oriole torpedoed—sinking’ written in pencil was picked up on 20 March off the Channel Islands. In Macbeth & Co v King'* a vessel sailed from Hull for the Tyne on 15 February 1915. She reached the Spurn lightship where her Humber pilot left her. She was never seen again. Bailhache J, held that she was lost by a war risk in view of the fact that the seas in which she was sailing were rendered dangerous owing to the possibility of mines from an English minefield having got adrift. Further, there were German mines and submarines in the area.'° In Euterpe SS Co Ltd v North Of England Protecting and Indemnity Association Ltd'® a vessel was passing up the East Coast of England on 7 January 1917. She passed Great Yarmouth. Nothing more was heard of her. Rowlatt J, held that the vessel had been lost by a war risk.'’ She had probably struck a mine or had been torpedoed. She had evidently perished from a sudden disaster, for no pieces of wreckage or bodies were found, and no distress signals were heard. In British and Burmese Steam Navigation Co Ltd v Liverpool and London War Risks Insurance Association Ltd, and British and Foreign Marine Insurance Co Ltd'® a vessel left Liverpool for Rangoon via the Cape of Good Hope on 26 January 1917. She was in a seaworthy condition on sailing, but was never heard ofagain. She was believed to have passed through an area in which an enemy submarine had been operating. Other vessels had been lost by war risks about the same time near the course that she had probably taken. The disaster to her was sudden. 10 Tbid, at 410. '! As to the burden ofproof, see generally Ivamy, General Principles ofInsurance Law (4th edn, 1979), pp 439-449. 12 (1915) 31 TLR 630, KBD. '3 For the evidence set out in detail, see ibid, at 630-631. 4 (1916) 86 LJKB 1004, KBD (Com Ct). 'S For the evidence, see ibid, at 1005. '© (1917) 33 TLR 540, KBD. 17 For the evidence see ibid, at 540-541. '8 (1917) 34 TLR 140, KBD. 208 War and strikes risks She had wireless, but no message was received. There was evidence that an explosion sometimes threw wireless apparatus out of gear. Bailhache J, held that she had been lost by a war risk. There was sufficient evidence that she had been sunk by an enemy submarine.’? In Compania Maritima of Barcelona v Wishart?® a vessel left the Tyne for a Spanish port on 17 November 1916, and was never heard of again. Evidence! was given that she was seaworthy. But the weather in the North Sea was bad at the time and other vessels had been lost in the vicinity of where she was. Roche J, held? that she had been lost by a marine risk, and that she had not been torpedoed nor mined. The weather was far too bad to admit of effective submarine operations. In Munro Brice & Cov F W Marten® a sailing vessel left Gulfport for Fleetwood on 21 March 1917. In the ordinary way she would have arrived in 40 to 60 days. But nothing was ever heard of her. She had to pass through an area rendered dangerous by enemy submarines. The Court of Appeal* held that her loss was due to a war risk for, since she had not arrived, the necessary conclusion was that if she was shown to have entered that area, she must have been torpedoed. It was improbable that she had foundered owing to bad weather. In Mitrovitch Bros & Co v Merchants Marine Insurance Co Ltd° a sailing vessel disappeared whilst on a voyage from Mejillones (Chile) to Brest in 1917. In August 1917, when she was considerably overdue, a coat belonging to a member of her crew and a barrel marked with her name were picked up off Penmarch in an area in which enemy submarines were operating.° Rowlatt J, held that the proper conclusion was that she had been torpedoed, and that her cargo had been lost by war perils. In De Marco and Gazan v Scottish Metropolitan Assurance Co’ a vessel was insured against war risks. Whilst she was about 22 miles north of Cape Dukato, a thud was felt all over her. The hatches ofone ofthe holds were blown offand she sank in half an hour. The assured ea for a loss under the policy on the ground that she had been lost by a mine.® The insurer refused to pay, and alleged une she had been wilfully cast away by means of a bomb placed in her cargo.” RocheJ, held that the action failed because the assured had failed to prove that she had been lost by a war peril. In Zachariassen v Importers’ and Exporters’ Marine Insurance Co Ltd'° a fourmaster barque was insured in November 1920 against ‘mine risks only as per Norwegian conditions including missing’. She left Newport News for '° For the evidence see ibid, at 140-141. 2° (1918) 23 Com Cas 264. For the evidence see ibid, at 267-270. ? See ibid, at 268. The vessel was a Spanish one and her loss caused intense interest and hot S&S = debates in Spain. See ibid, at 269-270. (1920) 2 LIL Rep 2, CA. Bankes, Scrutton and Atkin LJJ. (1923) 14 LIL Rep 25. For the evidence in detail, see ibid, at 27-28. (1923) 14 LIL Rep 173 at 220. Evidence was given at the trial as to the presence of mines in the neighbourhood and the effect of mine explosions, etc. See ibid, at 226-227. Oo Evidence was given as to her cost, value and earning power at the time of the loss, and as to the Ww FF KDA oI over-insurance of the ship and cargo. See ibid, at 227-228. ® (1923) 18 LIL Rep 98, CA. Generally 209 Gothenburg on 1 October 1920, and was not heard of again. She was posted as missing in March 1921. Evidence was given that, at about the time of the voyage, vessels had been lost through mines in the North Sea. The Court of Appeal'' held that the assured had failed to prove that the vessel had been lost by a mine, but that upon its true construction the policy covered a case where the vessel was engaged on a voyage which involved mine risks and was not heard of again. Consequently the assured could recover on the policy. Bankes LJ, said:'* ‘It seems to me, taking this evidence and these reports as a whole, that it leaves the Court entirely unable to say that this vessel did not come within the mine area and therefore was not exposed to a mine risk. If she was exposed or may have been exposed to a mine risk, it seems to me that her case comes within the words of this policy in which the parties deliberately included words which were intended to cover a case where, if the vessel might have been exposed to a mine risk, and was missing in the sense that nobody could say exactly how she came to her end, then it is a case covered by the insurance.’ In General Steam Navigation Co v R'* a vessel sailed from Bordeaux to London in March 1918. On arrival in London her bottom was found to be damaged. The assured contended that she had collided with an enemy submarine on the night of 13-14 March. MacKinnon J, held that on the evidence’* they had failed to discharge the burden of proof. The damage had probably been caused when she had run over a submerged wreck in the previous August.'* In United Scottish Insurance Co Ltd v British Fishing Vessels Mutual War Risks Association Ltd: The Braconbush'® a steam trawler sailed from Aberdeen for the West Coast fishing grounds on 28 January 1942. An underwater explosion occurred when she was off Duncansby Head. She vibrated heavily, and later water was found to be coming in. Her pumps were unable to cope and she sank. AtkinsonJ, held that the assured had discharged the burden of showing that she had been holed as the result of contact with an explosive float, and that she had therefore been lost by a war risk. The suggestion that she had been holed by submerged wreckage was not borne out by the evidence.'’ 2 THE INSTITUTE CLAUSES The Institute War Clauses provide cover in respect of war risks, the extent of it depending on whether the subject-matter insured is cargo, hull or freight. (a) Cargo clauses Clause | of the Institute War Clauses (Cargo)’® states that the insurance covers (subject to specified exceptions’) loss of or damage to the cargo caused by '! Bankes, Scrutton and Sargant LJJ. 12 (1924) 18 LiL Rep at 100. '3 (1927) 27 LIL Rep 366, KBD. '4 For the evidence, see ibid, at 368-371. '® See ibid, at 371. 16 (1944) 78 LIL Rep 70, KBD. 17 For the evidence, see ibid, at 76-82. '8 These clauses are set out in Appendix III, pp 526-529, post. '° For the exceptions, see p 258, post. 210 War mee strikes risks war, civil war, revolution, rebellion, insurrection or civil strife arising therefrom, or any hostile act by or against a belligerent power; capture, seizure, arrest, restraint or detainment, arising from the above risks, and the consequences thereof or any attempt thereat; and derelict mines, torpedoes, bombs or other derelict weapons of war. 1 2 3 Clause 2 states that the insurance also covers general average”° and salvage charges,’ adjusted or determined according to the contract of affreightment and/or the governing law and practiceyincurred to avoid or in connection with the avoidance of loss from a risk mentioned above. (b) Hull clauses Clause 1 of the Institute War and Strikes Clauses (Hulls-Time)? states that subject to certain specified exceptions? the insurance covers loss ofordamage to the vessel caused by i ii iii iv v war, civil war, revolution, rebellion, insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power; capture, seizure, arrest, restrain or detainment, and the consequences thereof or any attempt thereat; derelict mines, torpedoes, bombs or other derelict weapons of war; any terrorist or any person acting maliciously or from a political motive; and confiscation or expropriation.* Clause | of the Institute War and Strikes Clauses (Hulls-Voyage)° is to similar effect. (c) Freight clauses Clause | of the Institute War and Strikes Clauses (Freight-Time)® and of the Institute War and Strikes Clauses (Freight-Voyage) ’ each state that subject to specified exceptions® the insurance covers i loss (total or partial) of the freight caused by a_ war, civil war, revolution, rebellion or insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent b c power; capture, seizure, arrest, restraint or detainment, and the consequences thereof or any attempt thereat; and derelict mines, torpedoes, bombs or other derelict weapons ofwar; and 2° As to ‘general average’, see pp 176-192, ante. As to salvage charges, see pp 192-193, ante. These clauses are set out in Appendix III, pp 547-549, post. For the exceptions, see p 261, post. Clause 2 of this set of clauses also incorporates some of the Institute Time Clauses (Hulls) including eg the ‘Pollution Hazard’ clause. As to this clause see p 170, ante. = wn These clauses are set out in Appendix III, pp 549-550, post. These clauses are set out in Appendix III, pp 558-559, post. These clauses are set out in Appendix III, pp 560-561, post. For the exceptions, see pp 264-267, post. w sh our The Institute Clauses ii loss (total or partial) of the freight arising from loss of or damage to the vessel caused by a any terrorist or person acting maliciously or from a political b 3 211 motive; confiscation or expropriation. INSURANCE BY THE STATE The effect of war or the imminence ofwar on the marine insurance rate can be seen by a reference to the state of the market in 1914 and in 1938 at the time of the Munich crisis. On | August 1914 the rates went up by 150 per cent. On 14 September 1938 the rates rose from one shilling to five shillings per cent, on 15 September to thirty-five shillings and on 16 September to as much as £5 per cent for continental marine insurance. 1 Ihe War Risks Insurance Act 1939 It was as a result of the chaos that ensued that the War Risks Insurance Act 1939 was passed. Part I of the Act secured that on the outbreak of hostilities ships would not be laid up and commerce interrupted by any lack of insurance facilities. Powers were confirmed by the Government enabling them to insure ships and cargoes in wartime, and also to cover them against ‘King’s enemy risks’ in advance of an outbreak of war, if reasonable and adequate facilities for such insurance were not otherwise available. The powers given by the Act of 1939 were extended by the Defence Regulations which had to be re-enacted annually under the Emergency Laws (Miscellaneous Provisions) Act 1947. a The Marine and Aviation Insurance (War Risks) Act 1952 The principal purpose ofthe Act of 1952 was to repeal Part I of the Act of 1939, and those provisions of Part III which relate to the insurance of ships and cargoes. Additional powers which are provided by the Act of 1952 are: i i1 iil The power to insure or reinsure aircraft; To enter into agreements in peace time to reinsure foreign ships against war risks when this country is at war or involved in other hostilities; and To insure goods moving between ship or aircraft and warehouse, or vice versa, at overseas ports.” It is desirable that the Government should have the power to insure or reinsure aircraft because British civil aircraft may continue to operate commercially during a future war, and there is a possibility that certain foreign aircraft may be taken on charter during war for commercial purposes, or that owing to the circumstances of the war, foreign aircraft may be based on this country. As regards the insurance of goods moving between ship or aircraft and warehouse or vice versa, the Act of 1939 applied only in the United Kingdom, ° Marine and Aviation Insurance (War Risks) Act 1952, s 2(1). xy 212. War and strokes risks y the Isle of Man and the Channel Islands, and it is felt that owing to the wider range of modern warfare this cover should be given also to overseas countries. The Act of 1939 authorised the insurance of foreign ships in wartime, but it became necessary during the last war to undertake the reinsurance of foreign ships, and the Act was amended in 1940 by Defence Regulation to make this possible. But there was no power to conclude in peace time any agreements with foreign countries for the reinsurance oftheir ships, and it is important that this new power should be given by the Act of 1952 so that they can know in advance that their ships can be adequately protected by insurance. The Act of 1939, as amended, authorised insurance or reinsurance by the Government only against King’s enemy risks. The Act of 1952 concerns ‘war risks’. This expression means: ‘Risks arising from any ofthe following events, that is to say, hostilities, rebellion, revolution and civil war, from civil strife consequent on the happening of any ofthose events, or from action taken (whether before or after the outbreak of any hostilities, rebellion, revolution or civil war, for repelling an imagined attack or preventing or hindering the carrying out of any attack, and includes piracy.’’° Similarly, in many parts of the Act reference is made to ‘war or other hostilities in which Her Majesty is engaged’. The arrangement ofthe Act of 1939 has been followed in the Act of 1952. The Secretary of State may, after the approval of the Treasury has been granted, enter into agreements with any authorities or persons— a whereby he undertakes the liability of reinsuring any war risks against which a ship or aircraft is for the time being insured; and b whereby he undertakes the liability of reinsuring any war risks against which the cargo carried in a ship or aircraft is for the time being insured. But the Secretary of State is not allowed to enter into an agreement whereby he undertakes the liability of reinsuring any war risks against which a foreign ship or aircraft is for the time being insured, except insofar as they arise during the continuance of any war or other hostilities in which Her Majesty is engaged, or arise after any such war or hostilities in consequence ofthings done or omitted during the continuance thereof.'! When an agreement has been made, it must be laid as soon as possible before each House of Parliament.’ If either House within 14 days resolves that the agreement be annulled, it becomes void, except in so far as it confers rights or imposes obligations in respect of things previously done or omitted to be done, without prejudice, however, to the making of a new agreement.'? With the approval of the Treasury the Secretary of State has power to carry on business: a at any time when it appears to him that reasonable and adequate facilities for the insurance of British shipsor British aircraft against war risks or any description of such risks, are not available, for the insurance by him of such ships, or as the case may be, such aircraft, against such risks or, as the case may be, that description thereof; POT bid, sil: EI Tibids, ‘sally. 12 Ibid,s 1 (2). "3 Tbid, s 1(2). Insurance by the state 213 b during the continuance ofany war or other hostilities in which Her Majesty is engaged, for the insurance by him of ships and aircraft (whether British or not); ¢ at any time when it appears to him that reasonable and adequate facilities for the insurance of cargoes carried in ships or aircraft against war risks, or any description of such risks are not available, for the insurance by him of such cargoes against such risks or, as the case may be, that description thereof; d during the continuance ofany war or other hostilities in which Her Majesty is engaged, for the insurance by him of cargoes carried in ships or aircraft; e during the continuance of any such war or hostilities, for the insurance by him of goods consigned for carriage by sea or by air, while the goods are in transit between the premises from which they are consigned and the ship or aircraft or between the ship and aircraft and their destination.'* The cover may be against war risks and no other, unless he is satisfied that in the interests of the defence of the realm or the efficient prosecution of any such war or hostilities it is necessary or expedient to extend the cover. / The Act contains transitional provisions for compensation in respect of goods lost or damaged in transit after discharge or before shipment within the first 7 days of the opening of a Government Office to undertake war risks insurance. The right of the assured to be paid direct by the Secretary of State as reinsurer in the event of an insurer becoming insolvent is preserved.'® A Fund under the control of the Minister is to be established and is to be called ‘The Marine and Aviation Insurance (War Risks) Fund’.'’ Into it are to be paid the premiums received by the Secretary of State under the Act.'® Any deficit in the Fund after payment of claims is to be charged on the Consolidated Fund,'° and any excess paid into the Exchequer.”° Accounts must be laid before Parliament in each financial year, except where the Treasury certifies that in the interests of the defence of the realm or the efficient prosecution of any war or other hostilities in which Her Majesty is engaged, it is inexpedient to do so.’ 4 MUTUAL INSURANCE ASSOCIATIONS War risk insurance is also undertaken by mutual insurance associations in respect of vessels entered with them.? B_ STRIKES RISKS The risks of a strike may be insured against under the Institute Clauses, the particular set of clauses to be used depending on whether the subject-matter is cargo, hull or freight. Be Tipid,.s-2(1))) 'S Tbid, s 3(1). len Tibi, 43 ‘7 Tbid, s 5(1). 18 Tbid;:s — (1), 19 Thid, s 5(2). 20" Thid,1s'5(3)- ' Tbid, s 5(4). ? See pp 220-224, post. 214 War “and strikes risks (a) Cargo clauses Clause 1 of the Institute Strikes Clauses (Cargo)? states that the insurance covers with specified exceptions,* loss of or damage to the cargo caused by 1 2 strikers, locked-out workmen or persons taking part in labour disturbances; any terrorist or any person acting from a political motive. Clause 2 states that the insurance covers general average” and salvage charges,° adjusted or determined according to the contract of affreightment and/or governing law and practice, incurred to avoid or in connection with the avoidance of a risk mentioned above. (b) Hull clauses Clause 1 of the Institute War and Strikes Clauses (Hulls-Time)’ and the Institute War and Strikes Clauses (Hulls-Voyage)® each include cover with certain specified exceptions in respect of loss of or damage to the vessel caused (inter alia) by ‘strikers locked-out workmen or persons taking part in labour disturbances, riots or civil commotions’. (c) Freight clauses Clause | of the Institute War and Strikes Clauses (Freight-Time)°® and the Institute War and Strikes Clauses (Freight-Voyage)'® each state that insurance cover includes, with certain exceptions, loss (total or partial) of the freight arising from loss of or damage to the vessel caused by 1 2 3 strikers, locked-out workmen or persons taking part in labour disturbances, riots or civil commotions; any terrorist or any person acting maliciously or from a political motive; and confiscation or appropriation. These clauses are set out in Appendix III, pp 530-532, post. For the exceptions, see pp 258-259, post. As to ‘general average’, see pp 176-192, ante. As to ‘salvage charges’, see pp 192-193, ante. These clauses are set out in Appendix III, pp 547-548, post. These clauses are set out in Appendix III, pp 549-550, post. These clauses are set out in Appendix III, pp 558-559, post. -_ON Oe Ge. Ss Gn) Ou These clauses are set out in Appendix III, pp 560-561, post. CHAPTER 16 Risks covered by protection and indemnity associations! Various risks are covered by the Protection and Indemnity Associations. These will depend on the particular type of Association concerned, eg whether the Association gives protection in the case of risks of a general nature, war risks, freight and demurrage risks, and through transit risks. A RISKS OF A GENERAL NATURE The cover afforded by the United Kingdom Mutual Steamship Assurance Association (Bermuda) Ltd is typical of that provided by similar Associations. The principal risks insured against by this Association are: 2 Damages or compensation for the loss of life or personal injury or illness. Expenses incurred under statute or collective or special agreements in respect of loss of life, personal injury or illness. Repatriation. - Crew substitute expenses. Loss of effects. Distressed seamen’s expenses. Port and deviation expenses. Life salvage. Collision liability. Fixed and floating objects. Damage to vessels or property other than by collisions. Liability under towage contracts. Liability arising under indemnities and contracts. Removal of wrecks. Quarantine expenses. Liability for loss or shortage of cargo or other property. Liability for damage to or responsibility in respect of cargo or other property. General average. Fines. Legal expenses. ' For the history and development of Protection and Indemnity Clubs, see ‘Report of Advanced Study Group No 109 of the Insurance Institute of London’, which was presented at a special meeting of members held on 8 January 1957, and reprinted by permission of the Institute. 215 216 Risks covered by protection and indemnity assoctations ™ . o . . . . » 1 Damages or compensation for loss of life or personal injury The shipowner is entitled to damages or compensation for loss of life of or personal injury to or illness of any person in or on board? or near the vessel, including hospital, medical or funeral expenses, for which the owner may in consequence be liable, arising out of the negligent navigation or management of the ship or other negligent act or omission on board ofor in relation to the ship. : 2 Expenses incurred under statute or special agreement in respect of loss of life or personal injury The Association will indemnify the owner in respect of hospital, medical and funeral expenses incurred under statutory obligation or in accordance with any collective or special agreement approved by the Directors of the Association in consequence of loss of life of or personal injury to or illness of any master or seaman on board the vessel, or any member of the crew of the ship who is proceeding to or from such ship, including expenses incurred in consequence of any master or seaman being by reason ofinjury or illness temporarily removed from the ship. Such expenses, including the expense of repatriation in consequence of illness, incurred in respect of the master of the ship without statutory obligation or collective or special agreement, is recoverable if the Directors determine that such expenses should not, having regard to all the circumstances of the case, be borne by or charged against the master. 3 Repatriation The owner can recover repatriation expenses incurred under statutory obligation in respect of any member of the crew of the ship, or any master or seaman who is proceeding to or from such ship. But no expenses are recoverable if they arise out of or ensue upon the termination of any agreement either in accordance with the terms thereofor by mutual consent, or the sale of the ship, or any other act of the shipowner in respect of the ship. 4 Crew substitute expenses The owner can recover expenses necessarily incurred in sending abroad substitutes, or in securing, engaging, repatriating or deporting a substitute engaged abroad, to replace any master or seaman on board ship who has died, or who has been left ashore or in consequence ofinjury, illness, desertion or in any other case in which the Directors of the Association shall determine that such expenses were reasonably incurred. No such expenses are recoverable if they arise out of or ensue on the termination of any agreement either in accordance with the terms thereofor by mutual consent, or the breach by the owner of any of the statutory or ? For a case where a protection and indemnity association excluded a particular fisherman from the coverage ofthe policy, and he unsuccessfully sued them and the shipowners for damages for preventing him from obtaining employment, see Goulart v Trans-Atlantic Marine Inc and Enos [1970] 2 Lloyd’s Rep 389, Mass SC. Risks of a general nature contractual obligations, agreement. 5 or of the terms or conditions of any 217 collective Loss of effects The owner is entitled to recover payments made to masters and seamen in respect of the loss of their effects by marine perils under the National Maritime Board Agreements or similar Agreements approved by the Directors of the Association or under statutory obligation. 6 Distressed seamen’s expenses The owner is entitled to recover expenses incurred by or chargeable to him under statutory obligations for the relief of distressed seamen. 7 Port and deviation expenses The owner can recover port and other charges solely incurred for the purpose of landing or disposing of stowaways or landing or securing the necessary treatment for an injured or sick person being carried in the ship including the net loss to the owner in respect of fuel, insurance, wages, stores, and provisions incurred for such purpose or while awaiting a substitute for such person. 8 Life salvage Life salvage is recoverable to the extent only that it is not recoverable from hull underwriters on the ship or from cargo owners or underwriters. 9 Collision liability | One-fourth of an owner’s liability, with costs incidental thereto, for damage done by collision with any other ship or vessel including the one-fourth liability which is not covered under the usual Lloyd’s policy on hull with the Institute Time Clauses (Hulls)* attached, and which may not be covered under other forms of hull policy approved by the Managers of the Association, is recoverable. 10 Fixed and floating objects The owner is entitled to an indemnity in respect of loss of or damage to any harbour, dock, pier, jetty or any other fixed or moveable thing whatsoever. He is also entitled to an indemnity for any loss or damage for which he is liable as a party to any agreement which relates to the cost of cleaning up pollution caused by oil which escapes from his ship. 11 Damage to vessels or property other than by collision The owner can recover for loss of or damage to any other ship or any property therein occasioned otherwise than by collision with the ship arising out of the negligent navigation or management of the ship or other negligent act or omission on board of or in relation to the ship. 3 See pp 170-176, ante. The Institute Time Clauses (Hulls) are set out in Appendix III, pp,933-540, post. ~ 218 Risks covered by protection and indemnity associations 12 Liability under towage contracts The owner is entitled to an indemnity in respect of loss or damage arising out of or during the course of customary towage of the ship in the ordinary course of trading for which he may become liable under the terms of the towage contract but only to the extent to which such liability is not recoverable under the hull policies. The Directors of the Association can reject or reduce a claim if they decide that it was unreasonable, having regard to all the circumstances ofthe case, to perform the particular towage or to enter into the particular contract of towage, or if in their opinion the particular contract of towage should reasonably have provided that the relevant risks and liabilities did not fall upon the owner of the tow. 13 Liability arising under indemnities and contracts The owner is entitled to claim from the Association in respect ofloss, damage or injury to persons (including loss of life and illness) or to any property whatsoever (including ships other than his own and any cargo intended to be or being or having been carried in his ship) for which he may be liable under the terms of an indemnity or contract given or made by him, or by the Association at his request, in consideration ofthe provision of any facilities afforded to or to be afforded to or in connection with his ship. 14 Removal of wreck The owner is entitled to an indemnity in respect of the costs and expenses of or incidental to the raising, removal, destruction, lighting or marking of the wreck of the ship, when such raising, removal, destruction, lighting or marking is compulsory by law or the costs thereof are legally recoverable from him.* The value of all stores and materials saved as well as of the wreck itself, must first be deducted from such costs, charges, and expenses, and only the balance thereof, if any, is recoverable from the Association. 15 Quarantine expenses The owner is entitled to recover in respect of quarantine expenses and extraordinary expenses incident to the outbreak ofinfectious disease upon the ship incurred for or by way ofthe disinfection of her or of persons on board her under quarantine or public health enactments, regulations or orders, including the cost of taking in fuel in quarantine, and of loading and discharging cargo and of the victualling of the crew and passengers after deducting the ordinary expenses of loading, discharging and victualling. He can also recover in respect of the fuel consumed for towage in proceeding to and from and lying at a special station or place in accordance with such enactments, regulations or orders. Expenses directly consequent upon bearing up for, or putting into, a port or place of refuge and resuming the voyage thereafter by reason solely of the outbreak of infectious or contagious disease upon the ship are also recoverable. * Seeeg M F Rudolph Corpn v Lumber Mutual Fire Insurance Co (Luria International, Third Parties): The Cape Borer [1975] 2 Lloyd’s Rep 108 ‘(District Court, Eastern. District of New York). Risks ofa general nature 16 219 Liability for loss or shortage of cargo or other property The owner is entitled to recover in respect of loss of cargo or other property intended to be or being or having been carried in the ship arising out of any breach of him or by any person for whose acts, neglect or default he may be legally liable of his obligation or duty as a carrier by sea properly to load, handle, stow, carry, keep, care for, discharge and deliver such cargo or property, or out of unseaworthiness or unfitness of the ship.° 17 Liability for damage to or responsibility in respect of cargo or other property The owner can recover an indemnity in respect of damage to or responsibility in respect of cargo or other property intended to be or being or having been carried in the ship arising out of any breach by him or by any person for whose acts, neglect or default he may be legally liable of his obligation or duty as a carrier by sea properly to load, handle, stow, carry, keep, care for, discharge and deliver the cargo or property, or arising out of unseaworthiness or unfitness of the ship. He is also entitled to recover the extra cost (in excess of the cost which would normally have been incurred by him under the contract of carriage) of discharging or disposing of damaged or worthless cargo, provided that he is liable for such cost and has no recourse to recover it from any other party. 18 General average The owner can recover an indemnity in respect of the ship’s proportion of general average, special charges or salvage not recoverable under the hull policies by reason of the value of the ship being assessed for contribution to general average or salvage at a sound value in excess ofthe insured value under the hull policies. The Directors of the Association may for the purpose of assessing any sum recoverable determine the proper value at which the ship should have been insured under the hull policies, and the Association will pay only the amount, if any, of the ship’s proportion of general average which would not have been recoverable under the hull policies, even if she had been insured thereunder at such value. 19 Fines The owner is entitled to recover an indemnity in respect offines imposed upon him in respect of a ship by any court, tribunal or authority of competent jurisdiction for failure to maintain safe working conditions in respect of the ship. An indemnity may also be recovered in respect ofa fine imposed on him for oil pollution, or on any seaman whom he may be liable to reimburse. > See e g Compania Maritima San Basilio SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd: The Eurysthenes [1977] QB 49, [1976] 3 All ER 243, [1976] 2 Lloyd’s Rep 171, CA; CVG Stderurgicia del Orinoco SA v London SS Owners’ Mutual Insurance Assoctation Ltd: The Vainqueur José [1979] 1 Lloyd’s Rep 557, QBD (Com Ct). 220 Risks covered by protection and indemnity associations 20 Legal expenses The owner is entitled to recover in respect of costs and expenses, including legal costs and charges, which he may incur in respect of or in avoiding or attempting to avoid any liability or expenditure against which he is wholly or partly insured by the Association. But no such costs or expenses are recoverable unless they have been incurred with the prior consent in writing of the Managers, or the Directors determine that they were reasonably incurred.» B WAR RISKS Various Associations are concerned with war risks,° eg the United Kingdom Mutual War Risks Association Ltd. a Detention of vessel and prolongation of voyage The Rules of an Association sometimes provide cover in respect of ‘Expenses incurred by the assured by reason of: (1) the detention of the insured ship in pursuance of the orders or directions or with the approval of the Committee of [the mutual insurance Association] or of any British Government Department or official or British military authority given in order to avoid (2) 1 loss of or damage to the insured ship by any peril hereby insured; prolongation of the voyage arising out of compliance with such orders or directions, or with such approval as aforesaid. . . . Nothing shall be payable in respect ofthe first 7 days of each such period of detention or prolongation and the amount recoverable shall be assessed by the Committee whose decision shall in all respects be final.’ ‘Directions’ In Union-Castle Mail SS Co Ltd v United Kingdom Mutual War Risks Association Ltd’ a warning had been issued by the Admiralty on 30 October 1956 stating that ‘In view ofthe situation between Israel and Egypt, merchant shipping is advised, for the time being and until further notice, to keep clear of the Suez Canal and Egyptian and Israeli waters.’ Diplock J, held that this warning did not constitute ‘directions’ for the purpose ofthe clause set out above because this term did not include a warning, the ignoring of which would give rise to no legal sanctions. His Lordship observed:® ‘Was the Admiralty warning a “direction” ofa British Government Department? In terms, it purports to be no more than “‘advice”’; and indeed, neither the Admiralty nor any other British Government Department had power to do any more than to advise as to action to be taken to avoid loss of or damage toa British merchant vessel. Such advice has no legal sanction behind it. 99 66 But the words “‘orders or directions” “‘of any British Government Department or official or British military authority” have a familiar and indeed an ominous ring. During the last war ° A number of cases concerning War Risk Associations are considered in chapter 15, for it appeared to be convenient to treat them there rather than in the present chapter. 7 [1958] 1 Lloyd’s Rep 58, QBD (Com Ct). 8 Ibid, at 67. The learned Judge said that little assistance in interpreting the word was given by other clauses in the policy: ibid, at 67-68. War risks 22) very wide powers to make orders by statutory instrument, and to give directions by less formal documents, enforceable by sanctions, were granted to Government Departments and officials, and, bearing in mind that this is a war risks policy, which contemplates the possibility ofa state of war, I should have little hesitation in holding that the words “‘orders or directions . . . of any British Government Department or official or British military authority” applied only to instructions, the ignoring of which would give rise to legal sanctions and did not include advice, warnings or exhortations which the shipowner was at liberty to accept or disregard, as he pleased.’ iw ‘Approval’ In Union-Castle Mail SS Co Ltd v United Kingdom Mutual War Risks Association Ltd? Diplock J, said'® that whether a particular step had been taken with the ‘approval’ of the Government authority within the meaning of the clause set out above was a question of fact. The approval need not be given in any particular form. It might be given in advance. It might be given retrospectively. It might be given generally to all ships or specifically to individual ships. If advice given by the Admiralty to ships generally was taken, steps taken in accordance with that advice were taken with the ‘approval’ of the Admiralty within the meaning of the clause. In this case the ‘Dunnottar Castle’ and the ‘Rhodesia Castle’ were insured under a war risks policy containing a clause in the form set out above. The “‘Dunnottar Castle’ was on a voyage round Africa in a clockwise direction, and arrived at Port Said on 30 October 1956. She was ordered by the assured to turn and proceed to Mombasa via the Cape of Good Hope, and return to London via the Cape of Good Hope. DiplockJ, held'' that in turning her back from Port Said out of the area covered by the Admiralty warning they were acting with the approval of the Admiralty. The fact that they were influenced by the probability that the Suez Canal was blocked was irrelevant. The ‘Rhodesia Castle’ was on a voyage round Africa in an anti-clockwise direction. On 2 November 1956 the assured ordered her to turn at Mombasa and return to London via the Cape of Good Hope and Mediterranean ports. The learned Judge held’? that in turning round at Mombasa and failing to proceed to Aden and Port Sudan, which were scheduled ports of call, she was not acting with Admiralty approval. wt ‘Prolongation’ In Union-Castle Mail SS Co Ltd v United Kingdom Mutual War Risks Association Ltd‘? Diplock J, held (obiter) that the word ‘prolongation’ was used not in a geographical sense but in a temporal one and observed:'* ° Supra. "0 [1958] 1 Lloyd’s Rep 58 at 68. 11 hid: at 69: '2 Ibid, at 70. His Lordship also held (ibid, at 68-69) that there was no approval express or implied by the Committee of the defendant Association of any ofthe steps taken by the assured. The Committee’s failure to raise objections to those steps could not give rise to an estoppel because there was no duty upon the Committee to speak. Further, the Committee’s admission that they would have given approval, if asked, did not include an admission that the approval ofthe rerouting instructions would have been given ‘in order to avoid loss ofordamage to the insured ship by any peril hereby insured’. But, in any event, there could not be an implied approval when none was in fact sought. 13 Supra. '4 [1958] 1 Lloyd’s Rep at 71. 222 Risks covered by protection ahd indemnity associations 3s ‘What he is entitled to recover is: ‘Expenses incurred by reason of the prolongation of the voyage.” If those words stood by themselves, ‘‘prolongation”’ might conceivably be construed in a geographical sense, although this is not the primary sense in which I would read it. Alternatively, it might be construed as meaning that the assured could recover the difference between the expenses actually incurred by him during the whole of the prolonged voyage and those which would have been incurred if the voyage had been carried out as originally contemplated. But these words do not stand alone. That ‘“‘prolongation” is used in a purely temporal sense appears from the reference to ‘‘period of prolongation” in the last part ofthe clause; there may be deviation without “prolongation”. The provision that nothing shall be payable in respect of the first seven days of such period of“prolongation” seems to me to make two things plain: First, that ‘prolongation”’ does not start until the date on which the voyage normally would have ended; and secondly, that it is the actual expenses incurred during the voyage, after the expiry of such seven days, which are recoverable, although no doubt this is a figure which may in practice have to be estimated.’ wv ‘Voyage’ Diplock J, said'° that the peril insured against was the prolongation of the voyage, and that this meant ‘the voyage upon which the vessel is engaged at the moment at which the steps are taken with the Admiralty approval in order to avoid loss of, or damage to, the insured ship by a peril insured. At that stage it is open to the owner to continue the voyage with a deviation, in which case he may have a claim under the policy, or to abandon the voyage, or to change the voyage, in which case he has no claim under the policy. Which ofthese courses he has in fact adopted is in each case a question of fact, and, indeed, may be one of degree.’ He considered that in each of the present cases the voyage, on which the vessel was engaged at the moment at which steps were taken to avoid the area referred to in the Admiralty warning, was changed. Consequently the assured had no claim under the policy in respect of either vessel. As far as the ‘Dunnottar Castle’ was concerned he observed:'® ‘It does not seem to me that the movements which she, in fact, undertook after turning back from the Suez area can be considered as a continuation of the same voyage on which she was engaged when she turned back. A call at Las Palmas for bunkers would no doubt not affect the identity of the voyage; nor would an omission to call at ports within the area to which the Admiralty warning applied; nor should I be understood as saying that some minor variation in the order of calling at scheduled ports must necessarily amount to a change of voyage. But, calls at four South African ports and one Portuguese East African port to carry new passengers in the reverse direction from the original voyage, the omission to call at Aden and two other ports (I exclude Suez which was in the warning area), however sensible it may be as a matter of commercial common sense, seems to me to amount to a new or changed voyage, and not toa prolongation of the voyage within the meaning of the policy.’ He said that similar considerations applied to the ‘Rhodesia Castle’, for five ports on the original route had not been called at, and four ports had been called at a second time on the return voyage.'” v Savings and benefits His Lordship also held’® (obiter) that neither any savings in dues before 'S Ibid, at 70. 16 Ibid, at 70. aS biderat 7s '8 Tbid, at 70. War risks 223 prolongation, nor benefits which accrued as a result of prolongation, should be taken into consideration in assessing the claim under the policy, and observed: ‘It does not seem to me that any savings made in consequence ofthe deviation which resulted in the prolongation of the voyage have any relevance to this calculation, any more than any additional expenses which may have been incurred before the expiry ofthe seven days after the date upon which the voyage would normally have ended. The same considerations apply to benefits. The clause relates to expenses only; but the kind of benefit which has been discussed in the present cases seems to me to be unlikely to accrue except in cases where there has been a change ofvoyage, in which case, as I have held, there is no claim under the policy. It is, I suppose, possible that by reason oflate arrival at intermediate ports consequent upon deviation, a shipowner might obtain additional passengers or freight for onward carriage, but it does not seem to me that the policy or the clause’is concerned with such matters, any more than it is concerned with loss of booked passengers or freight for onward carriage which results from such delay.’ vt Deviation His Lordship said that the view that the Admiralty approval did not operate on anything outside the area of the warning put the matter too high, and observed :*° ‘If the result of keeping away from the defined area is necessarily to cause a deviation which prolongs the length of the voyage upon which an insured vessel is engaged, the expenses incurred as a result of that prolongation would, in my view, be recoverable, subject to the franchise?° under the policy. I gave, in the course of the argument, the example ofa vessel on a voyage to Bombay which, as a result of the Admiralty warning, went round the Cape instead of through the Canal. The expenses incurred by the prolongation of the voyage to Bombay would, in my view, be recoverable, subject to the franchise.’ b Diversion of vessel In Atlantic Maritime Carriers SA v Hellenic Mutual War Risks Association Ltd; Capetandiamantis Compania Maritima SA; Eastern Seas Transport Corpn and Onent Shipping Corpn v Hellenic Mutual War Risks Association Ltd’ the plaintiffs had insured three” vessels which they owned—the ‘Mitera’, the ‘Kyriakoula D Lemos’ and the ‘Corsair’-—with the defendants, who were a P & I Club. The policies covered inter alia: ‘The net extra expenses reasonably incurred by the Assured in consequence of. . . diversion of the insured ship on a voyage already commenced, arising from compliance with orders, directions or recommendations by the Committee given in order to avoid loss or damage to the insured ship by any peril hereby insured.’ On 6 June 1967 the Suez Canal was closed as a result of hostilities between Israel and the United Arab Republic. On 8 June the defendants issued a circular letter stating that no ships insured by them should proceed through the Canal. The ‘Mitera’ was chartered on 27 April for a voyage from Sunderland to China. She arrived in ballast at Sunderland on 28 May, commenced loading on 29 May and sailed on 21 June. She arrived off Gibraltar on 30 June and because of the defendants’ circular letter went round the Cape of Good Hope to China. SS aibidkyat ale 20 Wiz the first 7 days of the period of prolongation. 1 [1968] 2 Lloyd’s Rep 124, QBD (Com Ct). 2 The fourth plaintiffs’ claim in respect of another vessel was not pursued. See ibid, at 125. 224 Risks covered by protection and indemnity associations The ‘Kyriakoula D Lemos’ was chartered on 12 April to carry a cargo from Casablanca to China. She sailed in ballast from Japan on 22 May for Casablanca. She arrived there on 28 June, and after loading went round the Cape of Good Hope to China. The ‘Corsair’ was chartered on 2 May for a voyage from Gdansk to Japan. She arrived in ballast at Gdansk on 9 June, and sailed for Japan on 12 June via the Panama Canal in compliance with the defendants’ letter. The plaintiffs contended that extra expenses were incurred in consequence of the diversion of the insured ships ‘on a voyage already commenced’, and that the defendants were liable to indemnify them. Roskill J, held that the action failed, for none of the cases fell within the coverage of the policies. The commencement of the loaded voyages which was after 8 June 1967 could not be related back to the point of time at which the respective ballast ‘legs’ oe His Lordship observed: ‘T have difficulty in seeing why, with all respect to Mr MacCrindle’s argument, it is legitimate to consider the whole of the antecedent contractual arrangements pursuant to which the ship is doing that which she is doing at the moment ofdiversion and pursuant to which she is at the particular geographical point at a particular moment oftime. I think the introduction of those words “‘on a voyage already commenced” does introduce something, as Mr Kerr put it, in the nature of ageographical concept. You have to ask yourself, ““What was she doing? Was she on a voyage already commenced when she was diverted?”’ It seems to me that it cannot be argued that any of them were at the material time on a voyage which had already commenced unless the commencement ofthat voyage can in each case be, as it were, related back temporally to the point of time at which the respective ballast legs began. In the first case the ship sailed on the loaded voyage during which she went round the Cape of Good Hope well after 8 June 1967. The same is true in relation to the material part of the second case. It is also true of the third case.’ The Court of Appeal* affirmed the decision.” Lord Denning MR, said that in the case of all three vessels the voyage did not begin until after the circular letter had been issued, so the expenses which had been incurred were not recoverable. CG FREIGHT AND DEMURRAGE RISKS Some Associations have been formed to cover expenses incurred in enforcing the rights of a vessel in respect of freight and demurrage, and in defending her in respect of claims made against her, eg the United Kingdom Freight, Demurrage and Defence Association Ltd. D THROUGH TRANSIT RISKS Through transit risks incurred by combined transport operators in the carriage of containers are insured by some Associations e g the Through Transit Mutual Assurance (Bermuda) Ltd. > [1968] 2 Lloyd’s Rep 124 at 133. * Lord Denning MR, Winn and Fenton Atkinson Ei. ° [1969] 1 Lloyd’s Rep 359, CA. CHAPTER 17 The exceptions The Marine Insurance Act 1906 sets out a number ofexceptions which apply to all policies unless there is a term in them to the contrary.' The Institute Clauses which are generally attached to the policy contain a number of clauses exempting the insurer from liability where the loss of or damage to the subject-matter insured arises from certain causes.” Other exceptions are sometimes found expressly stated in a policy.° Further, the undertaking of the insurer may be qualified so that he is not liable, e g if the subject-matter insured is outside an area defined in the policy or is not being used in a specified manner at the time of the loss or damage.* I EXCEPTIONS UNDER THE MARINE INSURANCE ACT 1906 There are various losses referred to in the Marine Insurance Act 1906 for which the insurers are not liable. These are: losses not proximately caused by perils insured against; losses caused by the wilful misconduct of the assured; losses caused by delay; losses caused by ordinary wear and tear; losses caused by inherent vice; and other losses eg those caused by vermin. nAorktwndre 1 LOSSES NOT PROXIMATELY INSURED AGAINST* CAUSED BY PERILS A rule which is applicable rather to the consideration ofthe facts of the loss than to the terms ofthe policy is that which decides to which ofseveral contributing causes a loss must be assigned. The principle which prevails is that the loss must be attributed to the actual and direct cause, so that where there are a number ofevents successive 1n order of time, each producing the one which follows it, the last event preceding and producing the loss is held to be the cause of such a loss. No question can arise when one cause only has come into operation. Discussion only ensues when there are two or more possible causes. Often it may 1 See pp 225-256, 2 See pp 256-267, 3 See pp 267-268, 4+ See pp 268-272, post. post. post. post. 5 For the doctrine of proximate cause, see further, Ivamy, General Principles of Insurance Law (4th edn, 1979), pp 404-419, and Ivamy, Fire and Motor Insurance (4th edn, 1984) pp 147-154. 225 926 The exceptions ¢ appear that one of the earlier events is the dominant cause in producing the damage. It may be the causa sine qua non, while the actual causa causans may seem to be comparatively insignificant. Nevertheless, the law does not regard the relative importance of causes in the production of loss, since such an inquiry, if pursued, would open up a wide field of speculation and lead to considerable uncertainty. In order therefore that the liability of the parties, in relation to the question whether the loss has been caused by any one of the perils insured against, may be ascertained and settled with some degree of certainty, the rule applied is causa proxima non remota spectatur. Thus, Bacon said:° ‘It were infinite for the law to judge ofthe causes of causes and their impulsions one of another; therefore it contenteth itself with the immediate cause, and judgeth of acts by that, without looking to any further degree.’ Hence s 55(1) of the Marine Insurance Act 1906 states: ‘Subject to the provisions ofthis Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against.’ Thus, the assured can only recover on the policy when the loss is a direct and immediate consequence of any peril insured against and not a remote consequence of that peril.’ So, in Cory v Burr,® where the master was guilty of smuggling, which led to the seizure ofthe ship by the revenue authorities, it was held that the actual loss was occasioned by the capture or seizure on the part of the authorities, and not by the barratrous act of smuggling. Lord Fitzgerald put the matter in this way:? ‘Ifin place of the Spanish cruiser having seized this vessel she had failed to seize her, but in the attempt to seize her and in the pursuit had sunk the ship, I should put the same question, _ “What caused the loss?”’, and the proper answer would have been not the barratrous act of the aptain, but the sinking of the vessel by the Spanish cruiser.’ Again, in Greenock SS Co v Maritime Insurance Co,‘° where the master was negligent in not procuring a sufficient supply of coal, and burnt the ship’s fittings, it was held that the proximate cause ofthe loss was the short supply of coal, and not the negligence of the master. Where a ship, disabled by perils of the sea, put into port for repairs, and in order to raise money for the repairs the master sold part of the cargo, it was held that the goods so sold were lost by the sale, and not by perils of the sea.*' Further, where a ship was blown by a gale into enemy waters and there captured, it was held that the loss was a loss by capture.'? In Greer v Poole’* a ship was detained by an action on a bottomry bond, and after the sale of the ship, the balance due to the bondholder had to be paid by a ° Max, reg |. 7 Shelbourne & Co v Law Investment and Insurance Corpn Ltd [1898] 2 OB 626. 8 (1883) 8 App Cas 393. ° Ibid, at 406. 10 [1903] 1 KB 367. "Powell v Gudgeon (1816) 5 M&S 431; Sarquy v Hobson (1827) 4 Bing 131. '2 Green v Elmslie (1794) Peake 278. '3 (1880) 5 QBD 272. Losses not proximately caused by perils insured against 227 the assured on cargo out of his own pocket. The payment by the cargo owner was held not to be a loss by a peril insured against, but the proximate cause of the loss was the inability of the shipper’s agent to pay off the charge which had been created. In Cator v Great Western Insurance Co of New York'* part of acargo was damaged by sea-water, and as a result suspicion attached to the remainder, which produced a diminution of the price on sale. Such diminution was a loss caused bysuspicion, and not bysea perils. In Mordy v Fones,'> where the master prudently sold damaged goods, and paid the proceeds to the parties concerned, it was held that the freight was lost by the action of the master in selling, and not by a peril insured against. In Meyer v Ralli,'® where a sale of cargo was ordered by the court in order to pay advances incurred at a port of refuge, the loss was held to have been caused by the sale and not by perils of the sea. In P Samuel & Co Ltd v Dumas,'’ where the proximate cause of the loss of a vessel was scuttling, the House of Lords'® held that the insurers were not liable, for by s 55(1) of the Marine Insurance Act 1906 they were only liable for any loss proximately caused by a peril insured against, and scuttling was not a peril insured against.’ Viscount Finlay observed:?° ‘The scuttling ofthis vessel occurred on the seas, but it was not due to any peril of the seas; it was due entirely to the fraudulent act of the owner. The scuttling was not fortuitous, but deliberate, and had nothing of the element of accident or casualty about it. Storms are “fortuitous”, the ordinary action of the waves is not, and fraudulent scuttling is even more decisively out of the region of accident. The entrance ofthe sea water cannot for this purpose be separated from the act which caused it.’ But in a dissenting speech Lord Sumner indicated that a scuttled ship was proximately lost by perils of the sea, and said:' ‘I find it impossible not to be influenced by the consideration that if a scuttled ship is not proximately lost by perils of the sea, then every cargo-owner who loses his goods with her is as uninsured as the scuttling shipowner. Curious results may follow. An owner-skipper of a craft of small value laden with, say, bullion, finds his anchor dragging as he lies in shelter and in shallow water, and to save his cargo from total loss if his vessel faces the gale outside and sinks in deep water, blows a hole in her stern and drops her on the mud in four fathoms, where the bullion is easily raised. I take it this, if reasonably done, is a general average sacrifice of the vessel and, subject to the ship’s contribution, is directly recoverable from cargo-owners and freighters. Can the captain not recover anything on his hull policy, nor the cargo-owners "4 (1873) LR 8 CP 552. See further Overseas Commodities Ltd v Style [1958] 1 Lloyd’s Rep 546, QBD (Com Ct) at 562 (per McNair J);Boon and Cheah Steel Pipes Sdn Bhd v Asia Insurance Co Ltd [1975] 1 Lloyd’s Rep 452, Malaysia High Court, at 455 (per Raja Azlan Shah J). "S (1825) 4 B&C 394. See also, Hadkinson v Robinson (1803) 3 Bos& P 388; Philpott v Swann (1861) 11 CBNS 270. '6 (1876) 1 CPD 358. 7 [1924] AC 431, HL. '8 Viscount Haldane LC, Viscount Cave, Viscount Finlay and Lord Parmoor; Lord Sumner dissenting on this point. 1° Their Lordships overruled a dictum in Small v United Kingdom Marine Mutual Insurance Association [1897] 2 OB 42, where it had been held obiter that where a vessel was scuttled, the mortgagee would have been entitled to recover for a loss by perils of the sea if he had not taken part in appointing the master. See the speech of Viscount Cave [1924] All ER Rep 66 at 77, and that of Viscount Finlay, ibid, at 79-80. 20 [1924] All ER Rep 66 at 79. " Ibid, at 89. 228 The exceptions : 2 anything on theirs, a loss by general average sacrifice being a loss by perils of the seas? That result follows from the respondent’s argument, but I think it is not a result which underwriters desire or intend.’ In Pink v Fleming? two ships came into collision, and one of them had to put into port for repairs. To effect the repairs her cargo of fruit had to be discharged and subsequently reloaded, in consequence of which, and also by reason ofthe delay, the fruit was damaged. It was held that the loss of the fruit did not arise from the collision. . With regard to loss by delay s 55(2)(b) of the Marine Insurance Act 1906 states: ‘Unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss proximately caused by delay, although the delay be caused by a peril insured against.’ The doctrine of proximate cause is not always easy to apply. An example of the difficulty occurred in Reischer v Borwick,* where a ship proceeding up a river collided with a snag,* and the collision caused a leak. The ship was anchored, the pumps were worked, and the leak plugged. But while the vessel was being towed to the nearest dock for repairs, the plug fell out. The captain ordered the tug to run the ship ashore. This was done, and the ship was abandoned. In an action against the underwriters Lindley LJ, said:° ‘It appears to me that an injury toa ship may fairly be said to cause its loss if, before that injury is or can be repaired, the ship is lost by reason of the existence of that injury—ie under circumstances which but for that injury would not have affected her safety.’ The court, therefore, arrived at the conclusion that the collision was the proximate cause of the loss, although the towing of the ship through the water might have been a concurrent cause. Application to chartered freight In Inman SS Co v Bischoff® the charterers had the option of putting the ship offhire if she was disabled, and they did so on that ground, the ship having struck on a rock and requiring repairs. It was held that the insurers on freight were not liable for the unpaid hire, because the loss was not caused by a peril insured against, but by the act of the charterers in putting the vessel off-hire. On the other hand, in Jackson v Union Marine Insurance Co’ a charter-party provided that the ship should proceed with all convenient speed from Liverpool to Newport, and there load a cargo for San Francisco, the freight to be paid on right delivery of the cargo. On the passage from Liverpool to Newport the 2 (1890) 25 QBD 396. See also Taylor v Dunbar (1869) LR 4 CP 206; Shelbourne & Co v Law Investment and Insurance Corpn Ltd [1898] 2 QB 626. [1894] 2 QB 548. See further, Leyland Shipping Cov Norwich Union Fire Insurance Society Ltd [1918] AC 350, where a vessel, which was insured under a policy containing a fc and s clause, was torpedoed by a German. submarine and brought into harbour, she took the ground on each side and finally broke her bulkheads and became a total loss. It was held that the loss was a loss from an act of hostilities. Te the trunk of a tree fixed at one end in the bottom of a river. [1894] 2 OB 548 at 551. (1882) 7 App Cas 670. See also Mercantile SS Co v Tyser (1881) 7 QBD 73; Williams & Co and Brankelow SS Cov Canton Insurance Office [1901] AC 462; Manchester Liners Lid v British and Foreign Marine Insurance Co Ltd (1901) 7 Com Cas 26. 7 (1874) LR’ 10'GP 125, Losses not proximately caused by perils insured against 229 vessel ran on to some rocks and sustained damage, the repairs of which would have taken so long as to frustrate the contract. It was held that the underwriters of a policy on the chartered freight were liable for the loss of freight consequent on the charterers cancelling the charter-party. Similarly, in The Alps* the charter-party provided for the payment of hire at so much per month, and stated that in the event of loss of time from want of repairs preventing the working of the vessel for more than 24 working hours, the payment should cease from the hour when the detention began. The vessel was damaged by fire. It was held that the insurers on a policy on chartered freight were liable in respect of the hire lost. The distinction between Inman SS Co v Bischoff? and Jackson v Union Marine Insurance Co'® and The Alps'' is that in the last two cases the loss of hire was the immediate result of the perils insured against, whereas in the first, case the loss was a result of the exercise of an option. In Continental Grain Co Inc v Twitchell’? a floating policy for 12 months from 1 June 1937 had been effected by the plaintiffs, who declared monthly the different ships, the profits which they wanted to insure and the anticipated profits in respect of each ship. In September 1937 they declared the mv ‘Oakre’, which was chartered to them under a time charter-party, and a policy was issued to them. This policy insured them in respect of: ‘Anticipated earnings and/or interest, warranted free of all average. Only against total and/or constructive total loss of vessel as per clause attached hereto.’ In September 1937 the plaintiffs sub-chartered her to Lamport & Holt Line Ltd for a voyage from St Johns, Newfoundland, to the River Plate. In October she stranded on Grand Manan Island in the Bay of Fundy, and sustained serious damage. She was repaired in 24+ months, but the repairs cost so much that she was a constructive total loss. But she was not treated as such, and was put back into service by the plaintiffs. Lamport & Holt Line Ltd paid $5,000 to be relieved of the sub-charter-party, and she was engaged on other voyages until July 1938, when the plaintiffs paid $35,000 to be relieved of the head charter-party because the freight market had gone heavily against them. The plaintiffs claimed under the policy in respect of the loss of anticipated earnings on the ship, or, alternatively, the loss of gross freight between the date of the stranding and the completion of her repairs. The Court of Appeal’? held that the claim failed. The proximate cause of the loss experienced subsequent to repairs being effected was the fall in the market, and not the constructive total loss of the vessel. Accordingly, there was no total loss of earnings due to the constructive total loss of the vessel. Lord Goddard said:!* ‘I think I cannot do better than read two paragraphs of Atkinson J’s'° judgment, with which I entirely agree and which seem to me to be conclusive ofthis case. ‘‘A total loss of earnings”’, he 8 [1893] P 109. See further, The Bedouin [1894] P 1. ° Supra. ‘0 'l 12 '3 Supra. Supra. (1945) 78 LIL Rep 251, CA. Lord Goddard, Du Parco LJ and UthwattJ. 14 (1945) 78 LIL Rep 251 at 255. 'S Tn the court below: (1945) 78 LIL Rep 107. 230 The exceptions ¥ says,'° “necessarily results from a total loss of the ship, but there is not necessarily a total loss of earnings after a constructive total loss of aship. If the ship is repaired before the expiration of the charter and is again in service, there has been only a partial loss of earnings due to the constructive total loss. If the repairs are not completed until after the termination of the charter, then there is a total loss of earnings due to the constructive total loss of the ship.” Later on he said: ‘“To succeed on the policy the plaintiffs must prove that there has been a total loss of such earnings, that is, of the valued earnings, of which the proximate cause was the constructive total loss of the ship. The only earnings lost by reason of the constructive total loss of the ship were those that would have been made between 31 October and 15 February. That which was lost as the result of the stranding was only part of that which had been valued. Any loss after 15 February was not attributable in any way to the constructive total loss. The policy did not insure against a loss of profits while the ship was in service, but against a total loss through being out of service.” ’ Sometimes the underwriter is protected by a special clause. Thus, clause 14 of the Institute Time Clauses (Freight) '” states: ‘This insurance does not cover any claim consequent on loss of time whether arising from a peril of the sea or otherwise.’'® Loss by apprehension of peril In accordance with the rule, ifa loss be occasioned through conduct arising out ofor caused by an expectation ofloss by a peril, such a loss is not recoverable by a claim for loss by that peril, for the peril did not cause the loss. Thus, Lord Alvanley CJ, said in Hadkinson v Robinson:'° ‘Where underwriters have insured against capture and restraint of princes, and the captain, learning that if he entered the port of his destination, the vessel will be lost by confiscation, avoids that port, whereby the object of the voyage is defeated, such circumstances do not amount to a peril operating to the total destruction of the thing insured. . . . A peril insured against. . . must be a peril acting upon the subject insured immediately and not circuitously.’ In Lubbock v Rowcroft?° a ship was bound from London to Messina, and at an intermediate port it was ascertained that, Messina being in the hands of the enemy, the ship could not go there without danger of capture. It was held that the assured on goods was not entitled to abandon and claim for a total loss, since the abandonment arose from an apprehension of capture by the enemy, and not from a loss within the terms of the policy. Similarly, in Forster v Christie,’ due to fear of an embargo at the port of destination the voyage was not pursued. It was held that the loss was not attributable to ‘arrest or detainments of kings, princes, and people’. Pewiibidsatel13: '” See Appendix III, pp 550-554, post. "8 Bensaude v Thames and Mersey Marine Insurance Co [1897] AC 609; Turnbull, Martin & Co v Hull Underwriters’ Association [1900] 2 QB 402; Scottish Shire Line Ltd v London and Provincial Marine and General Insurance Co [1912] 3 KB 51; Naviera de Canarias SA v Nacional Hispanica Asseguradora SA: The Playa de Las Nieves [1978] AC 853, [1977] pp 262-264, post. '? (1803) 3 Bos&P 388 at 392. 20 (1803) 5 Esp 50. 1 All ER 625, HL. As to this clause, see " (1809) 11 East 205; Blackenhagen v London Assurance Co (1808) | Camp 454; Parkinv Tunno (1809) 11 East 22; Nickels & Co v London and Provincial Marine and General Insurance Co (1900) 6 Com Cas 15; Kacianoff vChina Traders Insurance Co Ltd [1914] 3 KB 1121; Becker, Gray & Co v London Assurance Corpn [1918] AC 101. Losses not proximately caused by perils insured against 231 Negligence as the dominant cause There are some cases in which the dominant cause ofthe loss—i e the causa sine qua non—is the negligence of the master or crew, such negligence having produced the cause which in its turn had brought about the loss. In all such cases, if the cause from which the loss has resulted is one of the perils insured against, the insurer will be liable, notwithstanding the fact that the loss might not have occurred but for the negligence of the assured or his servants or agents. Thus, s 55(2)(a) of the Marine Insurance Act 1906 states: ‘The insurer is not liable for any loss attributable to the wilful misconduct ofthe assured, but, unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew.’” Accordingly, underwriters have been held liable in the following cases: i 11 Fire caused by the negligence of the mate.* Sloop running ashore through the negligence of the crew in going to sleep and keeping no watch.* iii iv Negligence of the crew in lashing the ship to pier posts with a rope of insufficient strength, thus causing a loss by stranding.° Negligence of the master in throwing too much ballast overboard, ey) making the ship top-heavy, thus causing a loss by perils of the sea. v_ vi Negligent stowage causing a loss by sea perils.’ Where for want ofa pilot a ship stranded and became a wreck, the perils of the sea formed the causa proxima and not the seizure and confiscation of the wreck by the Spanish Government.® It is sometimes said that if the negligence of the assured or his agents is the immediate cause of the loss, the insurer will not be liable. It would, however, seem that this proposition must be very limited in its application, for it would not include cases of barratry, and would appear to be confined in practice to those cases where the assured had neglected to make the ship fit for the purpose for which it was intended—ie where there has been a breach of the implied warranty of seaworthiness in the extended meaning which this warranty has acquired, in which case the insurer would escape liability whether the breach of warranty was intentional or due to negligence. It is difficult to conceive of negligence per se as the cause ofloss, although in a few cases the loss has been ascribed to it.” 2 For the relation between this subsection and s 78(4) of the Marine Insurance Act 1906, which states that it is the duty of the assured and his agents in all cases to take such measures as may be reasonable for the purpose of averting or minimising the loss, see Astrovlanis Compania Naviera SA v Linard: The Gold Sky [1972] 2 Lloyd’s Rep 187, QBD (Com Ct) at 221 (per Mocatta J). See further, pp 449-450, post. Busk v Royal Exchange Assurance (1818) 2 B& Ald 73. Walker v Maitland (1821) 5 B& Ald 171. Bishop v Pentland (1827) 7 B&C 219. Dixon v Sadler (1839) 5 M&W 405. Redman v Wilson (1845) 14 M&W 476. Hahn v Corbett (1824) 2 Bing 205. w & Dn oma See Westport Coal Co v McPhail [1898] 2 QB 130. 232 The exceptions In Bell v Carstairs!° a ship was condemned through the negligence of the owners in not supplying her with proper documents, and the condemnation expressly proceeded on the ground of want of documents. Lord Ellenborough CJ, held that the assured could not recover for a loss thus occasioned by their own neglect. Similarly, in Tanner v Bennett'' the insurer was held to be under no liability where a ship was allowed to be broken up by the agents of the assured after being surveyed in a negligent manner. * 2 WILFUL MISCONDUCT OF THE ASSURED Section 55(2)(a) of the Marine Insurance Act 1906 states: ‘The insurer is not liable for any loss attributable to the wilful misconduct ofthe assured, but, unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew.’ Wilful misconduct is equivalent to the wilful performance of the act which causes the loss. In such a case the insurers are not liable,'*as the law will permit no man to take advantage of his own wrong.’* In P Samuel & Co Ltd v Dumas,'* where a vessel insured under a time policy was scuttled with the connivance of her owner, one of the defences pleaded by the insurer when a claim was made under the policy was that, assuming that the insurance was for the joint benefit of the mortgagee of the vessel and her owner, the policy was avoided by the misconduct of the owner. In giving judgment in the House of Lords, Viscount Cave held that the interest of the mortgagee was separate from that of the owner, so the question of a joint interest did not arise. He observed:'* ‘In support of this contention, a well-known American authority (Duer on Marine Insurance, Lecture III, s 15) was cited; and it was pointed out that the proposition contended for is not inconsistent with the English case of Trinder, Anderson @ Cov Thames and Mersey Marine Insurance Co,'° which was a case of negligent navigation and not ofwilful misconduct. There is a force in this argument, but I am not prepared to say that in the present case it should prevail. It may well be that, when two persons are jointly insured and their interests are inseparably connected so that a loss or gain necessarily affects them both, the misconduct ofone is sufficient to contaminate the whole insurance: Phillips on Insurance (5th edn), vol I, s 235. But in this case there is no difficulty in separating the interest of the mortgagee from that of the owner; and if the mortgagee should recover on the policy, the owner will not be advantaged, as the insurers will be subrogated as against him to the rights of the mortgagee. In such a case the “assured” referred to ins 55(2) is the particular assured to whom it is sought to make the insurer liable. In my opinion, therefore, this contention also fails.’ In Lind v Mitchell,'’ where a schooner was damaged by ice and started leaking, one of the issues was whether she had been lost by the ‘wilful ‘0 (1811) 14 East 374. "T (1825) Ry&M 182. a "2 Thompson v Hopper (1858) EB&E 1038. '’ This principle is applied in all branches of insurance. See Ivamy, General Principles ofInsurance Law (4th edn, 1979), pp 283-286. ‘* [1924] All ER Rep 66, HL. Buelibidwatyas © [1898] 2 QB 114, CA. 17 (1928) 32 LIL Rep 70, CA. Wilful misconduct of the assured 233 misconduct of the assured’. The Court of Appeal'® held that, since such a contention had not been made in the court below,” it could not be raised on the appeal. So it was held that the loss was not attributable to his ‘wilful misconduct’.?° In Papadimitriou v Henderson‘ a policy had been effected in respect of freight and/or chartered freight and/or anticipated freight for a period of three months. The vessel was chartered for a voyage from Odessa to Marseilles for the carriage of lorries and spare parts consigned to agents for the Spanish Republican Government. She was captured by an insurgent warship and taken to Palma, Majorca, and condemned as prize. When the assured claimed for a loss of freight, the insurers repudiated liability on the ground that the loss had been caused by his wilful misconduct in continuing the voyage after the master had received warnings of possible interference by insurgent warships off Cap Bon. Goddard J, held that this defence failed, and that the assured was entitled to claim the whole of the sum insured under the policy.* He observed:? “The owner was under no obligation that I know of to divert his vessel from that voyage unless, of course, she was obviously running into danger. He would not want to lose his ship, and no doubt he would give instructions to his captain if he could. The only definite warning that the owner had, or that anybody had, was that some trouble, that is to say, some search or stoppage for the purpose of search, might be expected off Cap Bon; and when the owner was asked to order the ship to proceed to Malta for orders, as soon as terms were arranged under which she should proceed to Malta where he was not bound to allow her to go, he gave those orders. As soon as he was requested, and the terms were arranged under which she should put about and go back to Piraeus, she did, and there is no evidence before me to show that anybody was expecting that one of the Spanish warships belonging to the insurgent forces was lurking, to use a familiar expression, east of Malta. Even if there had been, I think it would be a very dangerous doctrine to lay down in the Courts of this country that the captain ofa neutral ship or the owner ofa neutral ship or the owner ofa ship belonging to a country not at war, is guilty of wilful misconduct if he tries to proceed with his contract voyage, simply because there is a risk of capture, as there must always be a risk of capture during a war, which is the very reason why shipowners and merchants insure against war risks.’ But his Lordship went on to say that in certain circumstances the position might be different and remarked:* ‘Of course, if it was a case in which the shipowner got warning that a blockade had been established at a particular port or that a ship was lying waiting at a particular point, and the shipowner deliberately sent his ship forward to that point to run the blockade, it may be that there would be, in certain cases, an inference to be drawn that he was not endeavouring to carry out the voyage, but what he was endeavouring to do was to get his ship captured, and that, of course, would be wilful misconduct.’ Evidence of assured’s connivance at scuttling A general guide as to the circumstances to be taken into account when considering whether a vessel has been intentionally cast away is to be found in '8 Scrutton, Lawrence and Sankey LJJ. 19 (1928) 31 LIL Rep 262. 20 (1928) 32 LIL Rep 70 at 73. (1939) 64 LIL Rep 345, KBD. As to this aspect of the case, see p 96, ante. (1939) 64 LIL Rep 345 at 348. Fr = wn Ibid, at 349. 234 The exceptions the judgment of MacKinnonJ, in Lemos v British and Foreign Marine Insurance Co Ltd,’ where he said:° ‘I think that three aspects have been considered, and have been properly considered; first of all, the circumstances ofthe actual loss of the ship, the nature ofthe casualty. In many of the cases to which I allude the ship was lost by being sunk at sea, and it was alleged that she struck sunken wreckage, or had been blown up by a mine, a very different thing from a case of a steamer which runs upon a rock. The second circumstance, or set of circumstances, to be considered, I think, is the nature and extent of the opportunity for communications between the master, the crew, and the owner, and the nature of thecommunications which are, in fact, alleged to have passed between them. The third set of circumstances that has always been considered, and which, obviously, is very material to consider, is the motives which operated to induce either the master or the owner, or both, to get rid of the ship by a pretended loss; for instance, the extent to which the owner would profit by the loss of his ship, having regard to the over-insurance ofthe ship, and the nature of his pecuniary position, his need for money, and various things ofthat sort. In some cases, if 1remember aright, the same sort of considerations applied to the master; whether the master had himself effected insurances on which he might stand to gain if the ship was lost. Those, I think, are the three types of facts which one has to consider in such a case as this.’ In Visscherij Maatschappiy Nieuwe Onderneming v Scottish Metropolitan Assurance Co’ a trawler sank 10 miles offshore in broad daylight. She was travelling at the rate of 1 knot. During the First World War she had been very profitable to her owners, but after the War she had been working at a loss. When she sank, her value was very substantially less than her insured value. The insurers contended that she had been cast away by the assured. The Court of Appeal® held that this defence succeeded. Having regard to the financial position ofthe assured, to the untrue explanation put forward by the crew and to the absence ofmotive in the crew apart from the owners’ interest, she must be presumed to have been cast away with the owners’ consent. In Coulouras v British General Insurance Co Ltd® the insured vessel sank in calm weather close to the West Hinder Lightvessel whilst on a voyage from Ghent to Southampton. She was insured for four times her actual market value.'° It was doubtful whether she was making any real profit.'’ Shortly before she sank the master ordered the cook to prepare a meal for the crew as he (the master) was going to sink her.’? The insurers contended that she had been wilfully cast away with the connivance of the assured. Rowlatt J, held that this contention succeeded, and that the claim failed. He observed:!* ‘Serious as the issue is, I must honestly say I have no doubt on the point that this ship was sunk by the captain, and that it was sunk with the connivance of the owner. There was no sort of reason for thinking the captain would sink her without the connivance of the owner, and without finding that any undue sums were given to the crew—as to which the evidence is obscure—certainly one would have thought that the owner, confronted with a * (1931) 39 LIL Rep 275, KBD. ° Ibid, at 283. For American cases in which scuttling was alleged, see The Lakeland (1927) 29 LIL Rep 293 (US Court of Appeals 6th Cir); Northwestern Mutual Life Insurance Co v Linard The Vainqueur [1973] 2 Lloyd's Rep 275 (SDNY). This decision was subsequently affirmed by the (US Court of Appeals 2nd Cir) [1974] 2 Lloyd’s Rep 398. 7 (1922) 10 LIL Rep 579, CA. ® Lord Sterndale MR, Warrington and Scrutton LJJ. ° (1922) 12 LIL Rep 220 at 266, KBD. '° Tbid, at 277. 'T Tbid, at 277-278. '2 Thid, at 280. "3 Tbid, at 280. Wilful misconduct of the assured 235 story of this kind, and honest in the matter, would most certainly have conducted some sort of investigation as between himself and the captain. There is no trace ofthat at all from first to last.’ In Donga Y Sanudo v Royal Exchange Assurance Corpn'* the insured vessel left Newport (Mon) for Pasajes. Early morning next day she sank off Bull Point ina calm sea. The insurers repudiated liability for her loss on the ground that she had been wilfully cast away with the privity of the assured. She was worth not much below her insured value. The freight market was bad. Bailhache J, held that scuttling had not been proved, and that the claim succeeded. He observed:'> ‘My view is that the handling of the Marianela after water was found in her was entirely discreditable. The crew left her much sooner than they should have done. With any decent seamanship she would have been safely beached, or, as I think, kept afloat. I attribute her handling to panic, and not to a desire to sink her. Had there been such a desire, I do not see why she should have been anchored within five to seven miles of Bull Point, lighted as brilliantly as oil lamps could.’ In Ansoleaga Y Cia v Indemnity Mutual Marine Insurance Co'® the insured vessel sank in the Gulf of Cadiz. She was insured for £245,000 under a policy which expired within a month. Her actual value at the time ofthe loss was £55,000."7 The assured owed four-fifths of her purchase price, and the vessel had ceased to make any profit. Water was found to be entering the vessel. Without sounding or taking steps to investigate, the master gave orders to abandon her. It was a calm night. The vessel sank in the direct line of shipping passing from the north of Europe to Gibraltar. The insurers contended that she had been cast away with the connivance of the assured. The Court of Appeal'® held that this defence succeeded, and that the action failed. In P Samuel & Co Ltd v Dumas’? a Greek vessel was insured under a time policy for 12 months by persons to whom she had been mortgaged. While on a voyage from Philippeville to the Tyne, she foundered in calm weather off the coast of Spain. When a claim was made by the mortgagee, one of the defences put forward by the insurers was that the loss was due to the wilful misconduct of the owner in procuring or conniving at the sinking of the vessel. BailhacheJ, held that if the owners had claimed under the policy, the claim would have failed because connivance at the scuttling had been proved,”° but that the innocent mortgagee was entitled to an indemnity under the policy. The House of Lords,’ however, held that the learned Judge was wrong on this point? because scuttling was not a peril of the sea and so was a peril not covered by the policy.* Consequently the action by the mortgagee failed. ‘4 (1922) 13 LIL Rep 126 at 166, KBD. 'S Ibid, at 192; 6 (1922) 13 LIL Rep 231, CA. '7 Scrutton LJ, said (ibid, at 245) that it was common knowledge that at the time ofa great slump in shipping values a number oflosses of ships happened under peculiar circumstances. This was the first case in which the Court of Appeal came to give judgment. It had already heard three other cases, and there were a large number of others waiting. '8 Bankes and Scrutton LJJ, and Eve J. 19 (1922) 11 LIL Rep 241, KBD; (1922) 12 LIL Rep 73. 20 The evidence is set out at (1922) 12 LIL Rep at 87-90. Viscount Haldane LC; Viscount Cave, Viscount Finlay, Lord Sumner and Lord Parmoor. ? [1924] All ER Rep 66, HL. As to this aspect of the case, see p 145, ante. 236 The exceptions In Elfte A Issaias v Marine Insurance Co Ltd* a new wooden vessel sustained damage in August 1920 in the Atlantic on her first voyage from Baltimore to Piraeus. The damage disabled the engines and caused a small amount of water to enter her. She was taken in tow by another vessel, but after some hours her master signalled that she was sinking and that he wished to be taken off. The master and chief engineer ofthe other vessel went on board her, and found that water was entering her rapidly owing to a pipe in the engine room having been intentionally disconnected. Efforts were made to salve her, but she sank. Her value at the time ofthe loss was about £40,000 less than her insured value. The insurers refused to indemnify the assured, and alleged that she had been intentionally cast away with his connivance. The Court of Appeal® held the insurers had failed to prove this,° and that the loss was due to an act of barratry.’ In Comunidad Naviera Baracaldo v Norwich Union Fire Insurance Society® a vessel was insured under a time policy for £150,000. Whilst on a voyage from Vivero to Rotterdam, she was alleged to have struck a submerged object. Water entered her in six places. She sank shortly afterwards. The weather was calm. The assured claimed for a total loss, but the insurers contended that she had been wilfully cast away with the assured’s knowledge and consent. At the trial it was proved that her value was substantially less than £150,000.° The assured owed their bankers £100,000 in respect of her purchase price.'°They were, however, in a sound financial position at the time of the loss.!! Before the loss they had attempted to lower her insured value.'? Further, they had attempted to fix her for other voyages after the voyage on which she had been lost.'* GreerJ, held that the vessel had been lost by a peril of the sea. The defence had not been made out and the claim succeeded. In Compania Naviera Martiartu v Royal Exchange Assurance Corpn'* a vessel was insured for £174,000 under time policies which expired in less than a month after she sank on a voyage from Vivero to Rotterdam south of Ushant. The insurers contended that she had been wilfully cast away by those on board her with the knowledge and consent of the assured, and repudiated liability under the policies. It was proved that her real value was only £14,000. She was on a course which would have taken her ashore inside Armen Rock instead of on a course which would have enabled her to pass clear of the dangers of Ushant. The sea was smooth and there was little or no wind. The vessel did not founder until 5 hours after the crew had taken to their boats. No atternpt was made to attract attention or secure assistance by means of rockets. The logs and papers were lost. * (1923) 15 LIL Rep 186, CA. ° Lord Sterndale, Warrington and Atkin LJ. © The evidence is set out at (1921) 15 LIL Rep at 187-188, 190. ’ As to barratry, see pp 161-169, ante. 8 (1923) 16 LIL Rep 45 at 93, 156, KBD. Ibid, at 45. sce Tbida at 157. o ** Tbid, at 157, '2 Tbid, at 159. 13 Tbid, at 158. ‘4 (1924) 18 LIL Rep 247, 19 LIL Rep 95, HL. Wilful misconduct of the assured 237 The House of Lords'® held that the claim failed, for she had been scuttled with the connivance of the assured. The Earl of Birkenhead said:'° “The owners, on the other hand, had a gigantic interest in the scuttling. The loss ofthe vessel at that particular moment meant indeed the difference to the company between solvency and insolvency. When once the fact of deliberate scuttling is established, the probability which remains to be balanced is as to whether such scuttling took place with or without the privity of the owners. Their Counsel pressed upon us the terms in which the minutes of the meetings were couched in the period immediately preceding the loss. I find this argument particularly unconvincing. Ifa man, who has an immense pecuniary interest in casting away his ship, has decided to commit this fraud, I should not expect any hint ofitto be contained in his papers. On the contrary, unless besides being a rogue he was also a fool, I should expect his papers carefully to convey the impression that he was engaged in arranging for the further employment of his vessel. Applying the general test which I have already indicated, I am satisfied that’the [insurers] have discharged the task which this case imposed upon them. In other words, they have proved facts from which there springs an irresistible inference that the owners accomplices in the fraudulent destruction of the vessel.’ were In Anghelatos v Northern Assurance Co Ltd'’ the insured vessel was on a voyage from Newport News to Haifa when she ran ashore on the Formigas Rocks near the Azores. She became a total loss. The insurers contended that she had been deliberately cast away by the instructions and with the privity of the assured. There was inconsistency ofevidence with regard to her position. '® There were no ship’s papers.” Money had been distributed to her crew.?° There were telegrams sent by the master to the chief officer as to the evidence to be given." The assured’s financial position was desperate.* The House of Lords? held that the claim failed. The vessel had been wilfully cast away by the master with the connivance of the assured. Lord Shaw said:* ‘I am of opinion that the vessel did not perish by accident, but was deliberately run on the rocks. Her value was between £15,000 and £16,000, and she was insured for the sum of £150,000 on ship alone. The enormous financial advantage of a loss or wreck to the owner is admitted, but the evidence as regards the owner is not relevant to this case, for it says that he was not superior to this class of temptation. This class of nefarious adventure was not unknown to him. After full inquiry by a court oflaw, he had been adjudged guilty of these malpractices on at least one former occasion. Heis, in short, a convicted scuttler, and he was at the period of this occurrence in desperate straits for money. This was not the first ship he had dishonestly sent to the bottom ofthe sea. There are further details, but they do not abate, but add to the grossness of this scheme. This, in my opinion, is a case to be judged upon the whole evidence. I only express this separate opinion in order to say that I decline to accept this case as ruled or even assisted by any presumption in favour of accidental loss.’ In Société dAvances Commerciales (SA Egyptienne) v Merchants’ Marine Insurance 'S Earl of Birkenhead, Viscount Finlay, Lord Dunedin, Lord Sumner and Lord Carson. 16 (1924) 19 LIL Rep at 97. See also the speech of Viscount Finlay, ibid, at 98, and that of Lord Sumner, ibid, at 99. 17 (1924) 19 LIL Rep 255, HL. '8 Thid, at 256. 19 Thid, at 258. 20 Tbid, at 259. Ibid, at 260. Ibid, at 257. Earl of Birkenhead, Lord Atkinson, Lord Shaw, Lord Sumner and Lord Wrenbury. Po e wn (1924) 19 LIL Rep at 261. See also the speech of the Earl of Birkenhead, ibid, at 260, and that of Lord Sumner, ibid, at 262. 238 The exceptions : Co> the insured vessel was carrying a cargo of onions from Alexandria to New York, and sank in calm weather 50 miles off the North African coast when 3 days out on her voyage. The insurers refused to pay for the loss, contending that she was scuttled at the instance of one Schemeil, who was part owner of her to the extent of 75 per cent, and was also the owner of the onions. The Court of Appeal® held that the irresistible evidence was that she had been wifully cast away, and that the claim failed. In Domingo Mumbru Société Anon v Laurie’ a vessel was steering a course unusually close to the shore. An explosion was said to have occurred in a bunker. Her master turned her towards the shore, and she stranded shortly afterwards. She got off without assistance and sank while being towed into Cavalaire Bay. The weather was fine and calm. She was insured for £180,000. Her market value did not exceed £30,000. The insurers contended that she had been wilfully cast away with the connivance of her owners. At the trial divers gave evidence that they had found tank tops off and valves open. Rowlatt J, held that the defence succeeded, and that the claim failed. In Banco de Barcelona v Union Marine Insurance Co Ltd® the plaintiffs had insured their cargo of bales of cloth on the steamer ‘Cruz’ for a voyage from Barcelona to Galatz. The vessel was abandoned by her crew except for her master off Sardinia. She later sank, the master going down with her. A diver found the tank injection valves to the tanks over two of the holds open, and both main injection Kingston valves and the port bilge injection valve open. The plaintiffs had taken over the cloth as purchasers, and had credited the price to the original owners. When a claim was made under the policy, the insurers contended that the loss was brought about by the wilful misconduct of the plaintiffs in procuring or conniving at the casting away of the vessel. Greer J, held that the claim failed. The vessel had been scuttled with the connivance of the owners” and some ofthose responsible for the management of the plaintiffs.'° In Empire SS Co Inc v Threadneedle Insurance Co'' a special jury returned a verdict'* that a vessel, which had been lost by fire whilst in port at Claremont on the James River in the United States, had been intentionally set on fire by the assured, and that she had been fraudulently over-insured. Branson J, accordingly entered judgment for the insurers. In Lemos v British and Foreign Marine Insurance Co Ltd‘? the insured vessel was in the course of entering Axim Bay in the Gold Coast, and stranded on the Hoever Rock, and became a hopeless wreck. The insurers repudiated liability on the ground that the loss was due to the wilful misconduct of the assured in procuring or conniving at the casting away of the vessel. (1924) 20 LIL Rep 74 at 140, CA. Bankes, Atkin and Sargant LJJ. (1924) 20 LIL Rep 122 at 189, KBD. (1925) 22 LIL Rep 209 at 317, KBD. oO wornrnanwn His Lordship said that it was quite impossible in the present case to make out a case of barratry: ibid, at 329. For further proceedings concerning security of costs pending on appeal, see (1925) 23 LIL Rep 55, 214, CA. ** (1925) 22 LIL Rep 437, 534. _ Ibid, at 537. N "3 (1931) 39 LIL Rep 275, KBD. Wilful misconduct of the assured 239 MacKinnon J, held that the claim succeeded. The stranding, although the result of negligence, was accidental.'* There was an absence of evidence of connivance.'* Further, the vessel was not over-insured,'® and there was no proof that the assured was financially unsound.'’ In Piper v Royal Exchange Assurance'® a yacht stranded on the Buxey Sands whilst on a voyage to Burnham-on-Crouch. When the assured claimed under the policy which he had effected in respect of her, the insurers refused to indemnify him on the ground that the stranding was not accidental. Roche J, held'® that the claim succeeded. Her topmast had broken by accident, and there was no reason to suppose that she had got on to the sands otherwise than by accident. , In Pateras v Royal Exchange Assurance”® a vessel was found to have been wilfully cast away’ on a rock near the Burling Light off the Portuguese coast. RocheJ, held that this had been done with the connivance of the owner. Amongst the evidence leading him to that conclusion was the fact that she was being employed very unprofitably round about the period of the loss, and that the chief officer, who had been her master, had been succeeded for the particular voyage by the owner’s son. In the words of the learned Judge:? ‘The interests of the owners point to the desirability of such an end to the ship and that includes, if it were done, that it was not done otherwise than with their consent. The fact was that the vessel was over-insured; she was worth about £5,000 and she was insured against total loss, ship and freight, for about £15,000. This is a matter of which the owners were themselves fully cognisant, but it is not a matter which influences me at all in arriving at my conclusion that the ship was cast away. But when that fact co-exists with a conclusion that the ship was cast away by her navigators, and when it is also clear that the ship was, as most ships were, navigated very unprofitably about this period, and when I think it is also plain that by an arrangement to which the late Mr Pateras was a party, this master, his son, whom I have found guilty of the conduct which I have described, and who became master for this voyage and arranged, rather unusually, the particular employment which she should go upon, I think the conclusion is inevitable that the late Mr Pateras was a party to what was done.’ In Grauds v Dearsley® a vessel foundered in the Bay of Biscay. Talbot J, held that her loss was not due to an explosion, as her owner alleged, but was due to scuttling with his connivance. He reached this decision after consideration ofa number of matters* including the fact that the evidence of the chief engineer was different at different times, the master’s conclusion, in a few minutes after receiving the engineer’s report, that the ship was sinking and must be abandoned as soon as possible, the absence of any real attempt to investigate ‘4 Ibid, at 287. "® Ibid, at 287-288. '© Ibid, at 288. 17 Tbid, at 288. 18 (1932) 44 LIL Rep 103, KBD. The case also concerned insurable interest and the defence of non-disclosure of amaterial fact. As to these matters, see pp 17-18, ante, and pp 61-62, ante, respectively. 19 20 (1932) 44 LIL Rep 103 at 118. (1934) 49 LIL Rep 400, KBD. For the evidence on this point, see ibid, at 407-409. Ibid, at 409. 1935) 51 LIL Rep 203, KBD. The learned Judge sat with Mr John McLaren as an assessor. BwN > See ibid, at 231. 240 The exceptions A further or to save the ship, and the false evidence which had been given as to the weather and sea conditions while she slowly sank. In Maris v London Assurance> the insured vessel sank at night after striking a submerged rock off the island of Brusnik in the Adriatic. The insurers repudiated liability on the ground that she had been wilfully cast away with the connivance of the assured. Evidence was given that the weather was fine and that the sea was smooth. The vessel was abandoned soon after striking the rock. The chart and official log were brought away. There was no evidence of previous preparation or that the master and crew had brought away more than the barest belongings. The Court of Appeal® held that the assured’s claim succeeded, for it had been shown that the casualty was fortuitous. In Compania Naviera Vascongada v British and Foreign Marine Insurance Co Ltd ihe vessel was insured under a time policy. While on a voyage in ballast from Larne to Port Talbot, she sprang a leak through striking the quayside when manoeuvring to leave Larne Harbour, and through heavy weather sank in the Irish Sea. The assured claimed for a total loss, but the insurers contended that she had not been lost by the perils insured against, and had been intentionally lost by those in charge of her at the instigation or with the connivance of the assured.® Branson J, held that the action succeeded. The assured had discharged the burden of proof of showing that the loss was fortuitous,’ the master honestly believing that the vessel was so nearly in a sinking condition that it was time to abandon her and useless to try to tow her to port. In Canning v Maritime Insurance Co Ltd'° a vessel was lost off the Isle of Wight. It was found that she had been scuttled by her owner, though the master was nota party to his act.'! BransonJ, held that the claim under the policy failed. It was true that the share in the insurance money which the assured would have received was not large. But the ship was his living, and an accident had happened to the stuffing box, and there was no money available to repair it. His Lordship observed :'? ‘It is said that the plaintiff had so little to gain by the loss of the ship that it is inconceivable that he took such a risk for so small an advantage. But was that so? True, the share he would get in the insurance money was not large, but as he himself said, the ship was his living, an accident had happened to the stuffing box and there was no money available to repair it. He showed himself, in the witness box, to be a man ofagile mind, and I have no doubt that he came to the conclusion that the best way to meet the difficulty was to sink the ship. His own story of his going to the captain when he himself did not believe that the ship would sink and suggesting that she should be beached and evidently persuading the captain that beaching was the only way to save the ship points in the same direction. Furthermore, it is very significant that the well in the hold was never sounded. I cannot conceive why it was not, except on the basis that the plaintiff knew that water was going in there.’ (1935) 52 LIL Rep 211; CA. Greer, Slesser and Roche LJJ. (1935) 54 LIL Rep 35, KBD. Another aspect of the case, viz whether she had been sent to sea in an unseaworthy condition orAananw with the privity of the assured is considered at pp 305-306, post. ° As to the evidence, see (1935) 54 LIL Rep at 50-57. *© (1936) 56 LIL Rep 91, KBD. 11 See ibid, at 104. 12 Thid, at 104. Wilful misconduct of the assured 241 In Bank of Athens v Royal Exchange Assurance'* the insured vessel had been stranded near the Cape Saint Vito lighthouse owing to a wilful act of the master.'* Branson J, held that a claim by the assured to recover for a constructive total loss failed on the ground that the stranding had been done at his instigation. In giving judgment he observed:!> ‘But once one is convinced, as I am, that the master wilfully cast the ship away, the inference that he did so with the connivance of the owner becomes irresistible when the owner has given false evidence in the box, when he had every inducement to throw his ship away, and when he neither asks for nor receives any explanation from the master ofhow the loss came about for at least three weeks after the event.’ This decision was subsequently affirmed'® by the Court of Appeal.!7 The vessel in Compania Naviera Santi SA v Indemnity Marine Assurance Co Ltd: The Tropaioforos'® was registered in Panama and was insured for £160,000. At the time of her loss in good weather in the Bay of Bengal it was clear that she could not have much ofa future as a trading vessel because freight rates had slumped alarmingly and she was nearly 40 years old. The assured claimed under their policy for a loss by perils of the sea. Pearson J, held that on a balance of probabilities they had failed to prove their case, and that the vessel had been scuttled.1? The evidence which led his Lordship to this conclusion was composed of a great many facts pointing the same way. Instead of an SOS message being sent out, the master had sent a private telegram to the ship’s London agents stating that water had entered the engine and boiler room, and that he had ordered the crew to abandon her. The 13 (1937) 57 LIL Rep 37, KBD. 14 For the evidence on this point, see ibid, at 57-58. 'S *© 17 *8 Ibid, at 62. ; (1937) 59 LIL Rep 67, CA. Greer, Slesser and Scott LJjJ. [1960] 2 Lloyd’s Rep 469, QBD (Com Ct). The case lasted 42 days, and the costs were reported 19 to have amounted to £90,000. The subsequent history of the case is noteworthy. Judgment was given in December 1960. The assured lodged an appeal against the decision, but in October 1961 applied to the Court of Appeal for it to be withdrawn, and this application was granted. The vessel had been insured with 53 other insurance companies besides the Indemnity Marine Assurance Co Ltd, and also with 2,093 Lloyd’s underwriters, and the assured company, when it commenced the action, agreed to be bound by the result. Nevertheless in June 1961 it started proceedings in the Greek Courts against two of the companies in respect of the loss of the vessel, and in the following October instituted further proceedings against some of the other insurance companies and the underwriters concerned. In December 1961 all the insurance companies and underwriters issued a writ against the assured claiming an injunction to restrain all proceedings against them in any country whatsoever. The assured did not enter an appearance or deliver a defence. The injunction was granted by McNair J, in January 1962. The case again came before the court sub nom Royal Exchange Assurance v Compania Naviera Santi SA: The Tropaioforos (No. 2) [1962] 1 Lloyd’s Rep 410, QBD (Com Ct) on an application by the assured for the injunction to be set aside. Megaw J, declined to do so. He said (ibid, at 418) that the assured had litigated in this country deliberately and voluntarily in respect of the very matters concerning which it now sought to obtain a reversal of the decision of the courts of this country, and had done so when it was still exercising its right of appeal in this country. Further, the litigation here had been conducted on the basis ofan agreement that it would not litigate elsewhere. But the assured had broken the agreement, and had commenced proceedings in the Greek courts in respect of the same matters. Although the assured was not resident within thejurisdiction and had no assets here, his Lordship considered that he was entitled to order the stay of all further proceedings because its conduct amounted to ‘an abuse of the process of the court’. It was at any rate vexatious and oppressive. 242 The exceptions : telegram was false, for it gave her position wrongly. It had been sent deliberately to prevent early discovery of the vessel. When an SOS message was sent out 30 minutes later, once again the wrong position was given. Two and three-quarter hours later the ship went down, and the correct position was then sent out. When her crew were picked up by another ship, they were found to have brought their luggage with them, and the master was perfectly dressed and clean shaven. But, when he was asked for the logs, he said that they had gone down with the ship. ‘ In Astrovlanis Compania Naviera SA v Linard (The Gold Sky)*° a vessel sank off Gibraltar and the assured claimed an indemnity from the insurer in respect of a total loss by perils of the sea. They contended that a large vertical crack in the shell plating on the port side low down in the engine room had developed and the resulting jet of seawater which came in had proved impossible to control. The insurer put the assured to strict proof that the vessel had been lost by perils of the sea, and, in the alternative, alleged that she had been scuttled with the assured’s connivance.’ Evidence was adduced to show that the vessel had sunk with a salvage tug standing by, and that she had refused offers of assistance by the tug. Mocatta J, held that the insurer had not proved beyond reasonable doubt that the vessel had been scuttled,” but that the assured had not proved, on a balance of probabilities, that her loss was fortuitous.* Accordingly, the claim failed. InN Michalos & Sons Maritime SA v Prudential Assurance Co Ltd, The Zinovia* a vessel ran aground in the Gulf of Suez and became a constructive total loss. The assured claimed an indemnity under the policy on the ground that she had been lost by a peril of the sea. The insurers repudiated liability alleging that the assured had recruited a person as chief officer to join the vessel at Port Said with a view to running her aground. Bingham J, gave judgment for the assured for, on the evidence,° the insurers had not satisfied the court that the vessel had been deliberately cast away, and the owners had succeeded in showing that the loss was caused by a peril of the sea, ie grounding due to negligent navigation and her subsequent pounding on the bottom. Particulars of scuttling Where the insurers allege that a vessel has been scuttled, RSC Ord 18, r 12(1)° 20 [1972] 2 Lloyd’s Rep 187, QBD (Com Ct). ‘ The insurer also contended that the assured was in breach of the duty imposed by the Marine Insurance Act 1906, s 78(4). As to this point, see pp 449-450, post. [1972] 2 Lioyd’s Rep at 217. Ibid, at 216. [1984] 2 Lloyd’s Rep 264, QBD (Com Ct). The evidence is set out ibid, at 273-303. Which states: : ‘Subject to paragraph (2), every pleading must contain the necessary particulars of any claim, wn an defence or other matter pleaded including, without prejudice to the generality of the foregoing words— a particulars of any misrepresentation, fraud, breach of trust, wilful default or undue influence on which the party pleading relies; and b_ where a party pleading alleges any condition of the mind of any person, whether any disorder or disability of mind or any malice, fraudulent intention or other condition of mind except knowledge, particulars of the facts on which the party relies.’ Wilful misconduct of the assured 243 and Ord 72, r 7(2),’ and fair treatment require that so far as practicable the matter should be pleaded with particularity so that the assured may know what case he has to meet.® This does not mean that the assured is entitled to know what evidence will be adduced against him, nor is he entitled to particulars of circumstantial matters from which inferences will be sought to be drawn.° But he is entitled to have the best particulars available of those circumstances which the insurers will, whether by direct evidence or by inference, attempt to establish as constituting scuttling.'° Burden of proving connivance by assured The question as to whether the burden of proving!’ that a vessel has been wilfully cast away with the privity ofthe assured lies on the insurer was alluded to in Anghelatos v Northern Assurance Co,'* but the House of Lords‘eft it open. The Earl of Birkenhead observed:'? ‘It has, for instance, been much discussed whether, when a plaintiff produces an insurance policy and gives evidence ofthe stranding of the ship, he thereby shifts on to the insurance company the onus of showing that the stranding was not accidental, but was the result of fraudulent contrivance. Some difference of judicial opinion has appeared in the courts below. It is said, on the one hand, that if the plaintiff adduces evidence that the ship has been sunk, it is then for the underwriters to discharge effectively the onus of showing that the ship was not accidentally, but dishonestly, sunk. It ts said by some judges, on the other hand, that it is for the plaintiffin such cases to show not only that the ship perished, but that the ship perished by the risk insured against. My Lords, it is almost certain that this matter will one day require careful consideration by your Lordships when it arises as an issue which actually requires decision in this House, but, having regard to the view which I have formed, and as I understand your Lordships have all found, this is not such a case. It is not, in other words, for us, differing from our usual practice, to lay down a rule in abstracto when the conclusion we have reached absolves us from the necessity of a general pronouncement.’ Further, Lord Sumner said:'* ‘It is unnecessary on this occasion to deal with the onus ofproof. In view of what was said by Scrutton LJ, I think it is desirable to say this explicitly: That the question whether Samuel v 7 Which states: ‘Without prejudice to Ord 18, r 12(1), no particulars shall be applied for or ordered in an action in the Commercial List except such particulars as are necessary to enable the party applying to be informed of the case he has to meet or as are for some other reason necessary to secure the just, expeditious and economical disposal of any question at issue in the action.’ 8 Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd, The Dias [1972] 2 Lloyd’s Rep 60 at 73, CA (per Buckley LJ). ° Ibid, at 73 (per Buckley LJ). 10 Ibid, at 73 (per Buckley LJ). See further, Astrovlanis Compania Naviera SA v Linard (The Gold Sky) [1972] 1 Lloyd’s Rep 331, CA, where an order for particulars of scuttling would have been made, but was not made, in fact, because the application had been made too late, for it should have been made as soon as the defence was delivered. (See the judgment of Lord Denning MR, ibid, at 333, that of Edmund Davies LJ, ibid, at 338, and that of Stephenson LJ, ibid, at 339.) 11 For an American case concerning the question of the burden of proof in a case of alleged scuttling, see Northwestern Mutual Life Insurance Co v Linard (The Vainqueuer) [1973] 2 Lloyd’s Rep 275 (SDNY). (See the judgment of Ward DJ, ibid, at 280-282.) In this case it was held that although the proof was insufficient for the court to find that the vessel had been scuttled, the assured had failed to discharge the burden of proving that the loss fell within the policy. This decision was subsequently affirmed by the United States Court of Appeals, Second Circuit: [1974] 2 Lloyd’s Rep 398. 12 (1924) 19 LIL Rep 255, HL. For the facts of the case, see p 237, ante. 13 (1924) 19 LIL Rep at 256. 1* Thid, at 262. 244 The exceptions ® Dumas,'* a decision of your Lordships’ House this year, has not now in any way affected the burden ofproofisa question that will have to be seriously considered at some time. If it is the case that loss by wilful misconduct by the assured is a mere exception out ofa prima facie general liability from loss by stranding or by foundering, then I can well understand why the law says those who allege that exception must prove it, namely, the underwriters, but if it be that the law as I understand it lays down finally that an assured is insured against accidental stranding, but not against designed stranding, then it may well be that the assured only brings himself within the proposition that he has proved a loss by perils insured against, if he proves the circumstances ofthe loss were circumstances of accidental stranding. I, therefore, think that point should explicitly be kept open for future decision.’ The important question of the burden ofproofin the case ofa claim for a loss by barratry was considered by the Court of Appeal’® in Elfie A Issaias v Marine Insurance Co Ltd! in which it had to be decided whether the scuttling'® of the vessel had been carried out by the orders or with the concurrence of the owner. Warrington LJ, observed ae ‘In the present case the cause ofthe loss has been ascertained and is no longer in dispute. Prima facie it was an act of barratry and would be one ofthe perils insured against; and it is for the underwriters to show that the wrongful act of the master was not committed “‘to the prejudice” of the owner inasmuch as it was connived at by him. I apprehend that to cast away a man’s ship without his consent is ‘“‘to his prejudice” although the pecuniary effect may be to his advantage.” To similar effect is a passage in the judgment of Atkin LJ:*° ‘The charge ofprivity against the owner makes against him an allegation of what would be a crime if committed in respect of an English ship, and what, in the absence ofevidence to the contrary, I am entitled to assume is a crime by Greek law if committed in respect of aGreek ship; and is in any case a charge ofvery serious dishonesty. The plaintiffisentitled to invoke in his favour a principle of English law so well established that it is somewhat surprising to find little reference to it in some recent cases, the principle of presumption ofinnocence. I will cite from Stephen on Evidence, Art 94: ‘““The burden ofproving that any person has been guilty of a crime or wrongful act is on the person who asserts it, whether the commission of such act is or is not directly in issue in the action.” It is hardly necessary to cite authority, but I will refer to Williams v East India Co (1802) 3 East 192, per Lord Ellenborough at 199, an interesting case, for it threw on the plaintiff the burden of proving a negative: “The rule of law is that where any act is required to be done on the one part, so that the party neglecting it would be guilty ofa criminal neglect of duty in not having done it, the law presumes the affirmative and throws the burthen ofproving the contrary, that is, in such case of proving a negative, on the other side.” One might refer to numerous works of authority in support, for example, Taylor on Evidence, | 1th edn, s 112, and passages there cited. The same article in Stephen begins with a proposition which I also think is well established: ‘‘If the commission ofa crime is directly in issue in any proceeding, criminal or civil, it must be proved beyond reasonable doubt.” These propositions are the very cornerstone of British justice, and have contributed more 15 [1924] All ER Rep 66, HL. 16 Lord Sterndale MR, Warrington and Atkin LJJ. 17 (1923) 15 LIL Rep 186, CA. In Steam Tanker Padre Island Inc and Pullman Bank and Trust Co v London Assurance, Guildhall Insurance Co, The Padre Island [1971] 2 Lloyd’s Rep 431 (SDNY), where the assured contended that the loss of the vessel resulted from barratry, Garza DJ, said (ibid, at 432) that there had been much discussion about which party had the burden of proof on the particular issues, and that it was sufficient to say that regardless of which party had the various burdens, the evidence produced by the insurers carried the burden as to all relevant issues. 19 20 As to this aspect of the case, see p 236, ante. (1923) 15 LIL Rep at 189. Ibid, at 191. See also the judgment of Lord Sterndale MR, ibid, at 189. Wilful misconduct of the assured 245 than any other to establishing its fame: and I venture to think, despite the uneasiness felt at the suggestion by Counsel for the defendants, that they apply even to actions brought against underwriters. The question, therefore, is whether the defendants have succeeded in proving beyond reasonable doubt that the owner was privy to the act ofthe captain in scuttling the ship-—not necessarily by knowing or directing the particular act but by procuring, either by direct order or by hint or suggestion, or by even omitting to prevent a known or suspected intention in some way wilfully to lose the ship.’ In Pateras v Royal Exchange Assurance: The Sappho' Roche J, said:* ‘But substantially in my view the rule as to onus of proof is quite correctly stated by Lord Justice Bankes when the case of the Compania Martiartu was in the Court of Appeal. It is there reported in [1923] | KB 650, and the gist of the matter is that although there is, of course, and must be, a strong presumption against the commission of an act so criminal as the wilful throwing away ofa ship, yet if the matter be really uncertain as between that explanation of the loss and a fortuitous explanation of the loss, the onus ofproofis on the plaintiffs. Here, I have come to a conclusion definitely adverse to the plaintiff; but at all events I Should, as Lord Justice Bankes did in that case, be of opinion that I should find it impossible to say that the plaintiffs had established to my satisfaction that the loss of the vessel was due to a peril covered by the policy, that is to say, that it was fortuitous.’ He then went on to say that in his opinion the question of the burden ofproof was seldom of importance, and observed:* ‘It is a matter not only of reluctance but of mixed opinion on my part, that one must be very slow to assume against anybody that they would be guilty of the act of throwing away a ship, and, accordingly, the prima facie explanation of accidental loss is easily established and is easily founded, and it takes a good deal to persuade me at any rate that there is a rival explanation ofsufficient plausibility to displace the presumption that there was an accident. But such things are done, and in this case I have, after giving the matter the most anxious consideration, arrived at the conclusion that the explanation ofthis case is not accident but design.’ In Piermay Shipping Co SA and Brandt’s Ltd v Chester: The ‘Michael’,* however, KerrJ, said® that the assured must establish a loss by barratry, which involved establishing both a deliberate sinking and the absence of the assured’s consent. If at the end of the day the court was left in doubt whether the assured consented or not, then the claim would fail. He said that in Elfie A Issaias v Marine Insurance Co Ltd® the assured claimed in the court of first instance that the loss was due to perils of the sea as against scuttling, and Bailhache J, held that the vessel had been scuttled. The assured failed to persuade the Court of Appeal that the sinking was accidental and not deliberate. But they then also contended in the alternative that they could rely on a loss by barratry and attacked the Judge’s findings on the question of privity, although barratry had not been pleaded and had never been raised before. The Court of Appeal allowed the appeal to proceed on that basis, and disagreed with the inference ofprivity drawn by the Judge. It was suggested as one of the arguments for the insurers that, once the court was satisfied that the vessel had been sunk deliberately by a member of the crew, a presumption of privity at once arose. That was unanimously negatived by the court and it was 1 (1934) 49 LIL Rep 400, KBD. ? Ibid, at 407. 3 Ibid, at 407. 4 [1979] 1 Lloyd’s Rep 55, QBD (Com Ct). > Tbid, at 66. 6 (1923) 15 LIL Rep 186, CA. See p 236, ante. 246 The exceptions 2 held that the presumption was the other way because the assured could rely on the presumption of innocence. But perhaps because the issue arose in that way the judgments contained passages which lent themselves to the interpretation that even in a claim for barratry alone, an assured need prove no more than that the vessel was sunk deliberately, and the burden of establishing privity then shifted to the insurers. KerrJ, said’ that he could not think that that was correct in principle. In the ultimate analysis one must distinguish between what the assured had to establish in order to raise a prima facie case ofa loss by an insured peril ie barratry and what the insurers must establish by way of defence if (but only if) the assured first made out a prima facie case. The insurers had two strings to their bow. They could say that there was no case to answer because the assured had failed to make out a prima facie case; and they could go further and seek to establish a positive defence of scuttling. He thought that the relevant passages in the Elfie A Issaias v Marine Insurance Co Ltd® were directed to the latter aspect where the burden of establishing privity would clearly be on the insurers. When the case went? to the Court of Appeal,’® Roskill LJ, said:"? ‘But we wish to repeat what we said in giving a brief judgment formally dismissing the appeal, that the fact that we are agreeing with the conclusion reached by the learned Judge must not be taken as approval by this court of his views upon the question of burden of proof. It may assist if and when this question arises for decision if we indicate how the argument might perhaps be advanced the other way, an argument seemingly not fully advanced below since its logical result, if correct, must have been, we would have thought, that underwriters should have opened the case on the basis that once deliberate sinking was admitted the entire burden ofproving privity rested on them. The learned Judge appears to have reached his view because of the definition of barratry in r 11 of the Rules of Construction annexed to the Marine Insurance Act 1906. But with respect, he does not appear to have paid much regard to the decision of this Court in Elfie A Issaias v Marine Insurance Co Lid.\* The Court of Appeal hearing that appeal included both Lord Sterndale MR, and Atkin LJ (as he then was). The reports of their judgments contain statements clearly inconsistent with the learned Judge’s view. We have not overlooked that in Demetriades v Northern Assurance Co (The Spathari),‘> a majority of the Second Division of the Inner House appear to have treated the /ssazas case as irreconcilable with Compania Martiartu v Royal Exchange Assurance.'* When The Spathari reached the House of Lords,’ * the appeal failed without the question of scuttling or of privity or onus being further considered. We draw attention to the fact that in the Issacas case this court regarded the Martiartu case as irrelevant. In Martiartu the plaintiffs asserted but failed to prove a fortuitous loss. The burden was on them to do so. Underwriters sought to prove scuttling with privity. The burden was on them to do so. They succeeded. But in the Jssaias case, as the facts were determined in the Court of Appeal, the sinking was held to be, as in the present case it was agreed to be, not fortuitous but deliberate. The only remaining issue, there as here, was privity. Atkin LJ, and the other members ofthe court clearly thought and said that in sucha situation the burden of proof was on underwriters and that the assured was entitled to the benefit of the presumption of innocence. We ask but do not answer, for it is not necessary so to do, whether in these circumstances it was open to the learned Judge, or would, indeed, be open to us in this court, not to follow the decision in the /ssazas case in the present case in which deliberate sinking was admitted and the only issue was privity. Finally we think it right to ;4 [1979] 1 Lloyd’s Rep 5§ at 67. ® Supra. ? [1979] 2 Lloyd’s Rep 7. ‘© Roskill and Brandon LJJ, and Sir David Cairns. *} [1979] 2 Lloyd’s Rep 7 at 12. ‘2 (1923) 15 LIL Rep 186. See p 236, ante. "3 (1923) 17 LIL Rep 327. ‘* [1923] 1 KB 650, CA; affd [1924] AC 850, HL. *S (1925) 21 LIL Rep 265. Wilful misconduct of the assured 247 record, with reference to a passage in the judgment of Mocatta J, in Astrovlanis Compania Naviera SA v Linard, The Gold Sky'® on onus of proof, that Mr Evans frankly accepted that in that case as counsel for underwriters he had failed to remind the learned Judge of the decision of this court in Hornal v Neuberger Products,'’ to which KerrJ refers.’!® In NV Michalos & Sons Maritime SA v Prudential Assurance Co Ltd, The Zinovia'? Bingham J, said that in the case of barratry it was necessary to prove the loss and its causation by that peril. This would involve the assured in proving a deliberate casting away and the absence of consent on his part. In the absence of suspicious circumstances, lack of consent might readily be inferred, and very little in the way of proof might be necessary. But it would still seem wrong in principle that the burden ofdisproving an essential ingredient of the assured’s claim should be laid on the insurers. Accordingly, he was of the opinion that once the assured had proved a casting away by the deliberate act of the master or crew it was for tHe insurers to prove that the owners consented to or connived at the casting away.° Standard of proof The issue of barratry is effectively concerned with the presence or absence of fraud on the part of the assured. The issue arises in a civil case and the standard of proof required is therefore less than in a criminal case. Generally, issues of fact in civil cases are decided on a balance of probability, but the more serious the issue, the higher will be the standard ofproof required. This consideration has to be borne in mind in relation to the contentions on both sides, which are really obverse sides of the same coin. It clearly applies to the insurers’ positive allegation of scuttling and to some extent in the converse way to the assured because it may well be that they start with some measure ofa presumption of innocence in their favour. At the end ofthe case the issue is then whether, on the balance of probability, they can still rely on the presumption.* 3 LOSS CAUSED BY DELAY Section 55(2)(b) of the Marine Insurance Act 1906 states: ‘Unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss proximately caused by delay, although the delay be caused by a peril insured against.’ In St Margaret’s Trust Ltd v Navigators & General Insurance Co Ltd” a ketch insured under a time policy was put on a mud berth at Lymington. She slipped over and filled with water, and was later raised and towed to Pylewell Creek. No further steps were taken, and she gradually deteriorated and had no more than her break up value. MorrisJ, held that the assured was not entitled to an _ © [1972] 2 Lloyd’s Rep 187 at 216-217. 17 [1957] 1 QB 247, [1956] 3 All ER 970. 18 [1979] 1 Lloyd’s Rep 55 at 67. 19 [1984] 2 Lloyd’s Rep 264, QBD (Com Ct). ® Thid) at 272: 1 [1979] 1 Lloyd’s Rep at 67. See further WVMichalos & Sons Maritime SA v Prudential Assurance Co Lid, The Zinovia (supra), where Bingham J, at 272, alluded to the high standard required for proof of fraud in a civil case. N 2 (1949) 82 LIL Rep 752, KBD. 248 The exceptions : indemnity for a total loss under the policy because her eventual deterioration resulted from delay. All that he could recover, on the evidence adduced, was the expenses in raising her, which had been incurred under a ‘sue and labour’ clause? in the policy, and the estimated damage to her fittings caused by the submersion. In Federation Insurance Co of Canada v Coret Accessories Inc and Hirsh (trading as S A Hirsh & Co)* a case of handbag parts were insured for a voyage from Barcelona to Montreal under a policy which contained a clause stating: * ‘Warranted free of claim for loss or damage arising from loss of market, or for loss, damage or deterioration arising from delay, whether such delay be caused by a peril of the sea or otherwise, unless the risk of delay be expressly assumed in writing hereon.’ The case was not delivered at Montreal, so the insurers paid the sum insured to the assured in exchange for a receipt signed BY the assured’s agent.” The receipt provided that: ‘If at any time non-delivered goods be found in whole or in part, the undersigned undertakes to accept such goods and to reimburse the [insurers] to the extent of the insured value of the goods.’ The case was subsequently found and was delivered to the assured, who refused to accept delivery on the ground that the goods were seasonal, and as they had arrived late, could not be used. The insurers claimed repayment of the sum insured. Collins J, giving judgment in the Quebec Superior Court, held that the action succeeded. He said that the loss had been caused by delay. The policy did not cover the event which gave rise to the loss, so the assured had no claim under it, and he must return the money paid by the insurers on the presumed loss. The learned Judge observed:° ‘The fact that the [assured] was unable to use them when they were delivered because oftheir seasonal nature does not affect the legal situation. While the failure to deliver on time resulted in a monetary loss to the [assured] such a loss was not insured against. The [assured] was unable to satisfy the court that the loss covered by such a delay was covered by any term ofthe policy. Loss or damage arising from loss of market as well as loss, damage or deterioration arising from delay are specifically excluded. It was delay which caused the loss or damage. There was no obligation to deliver within a specified time. Consequently as the policy did not cover the event which gave rise to the loss, the [assured] has no claim under the policy and the money paid in good faith on a presumed loss must be returned by the [assured].’ 4 ORDINARY WEAR AND TEAR Section 55(2)(c) of the Marine Insurance Act 1906 states: ‘Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear...” In Wadsworth Lighterage and Coaling Co Ltd v Sea Insurance Co Ltd’ a steam barge over 50 years old was*insured under a time policy which provided: 3 As to this aspect of the case, see pp 445-446, post. * [1968] 2 Lloyd’s Rep 109, Quebec Superior Court, District of Montreal. ° The court found that the agent was authorised by the assured to sign the receipt. As to this point, see ibid, at 110-111. © Ibid, at 111. 7 (1929) 34 LIL Rep 285, CA. Ordinary wear and tear 249 ‘This insurance is against the risks of total and/or constructive and/or arranged loss, including general average and salvage and damage to such vessel by collision with any other vessel, or with any fixed, floating or other object, or by fire, lightning, stranding or sinking.’ One night the vessel sank in the Coburg Dock, Liverpool. No one was on board at the time. There was no evidence of any accident which caused her to sink. The assured claimed for a total loss. The Court of Appeal® held that the claim failed since the loss of the vessel was due to ordinary wear and tear.” In the course of his judgment Greer LJ, observed:'° ‘A barge at some time or other comes to the end ofits working life; it has had so much wear and tear that it is no longer able to withstand the wear and tear that is the ordinary incident ofits every-day work. I think that the learned Judge has found that that was the reason why this vessel sank in dock on a quiet night when there was no wind and, so far as anybody could ascertain or imagine, no effective cause for making a barge which was in good condition sink. I not only see no reason for differing from the learned Judge but I see very strong reasons for agreeing with those findings. I think the explanation that was suggested by Mr Little in his evidence is one which cannot be accepted having regard to the other facts proved in this case. If there had been on the way to the dock or in passing into the dock an unusual bump, one would have expected that those on board would have known about it, and if they suffered the next morning the loss of their vessel, they would have had no difficulty in recollecting that there was an extraordinary bump the night before. In addition to that, I find it difficult to suppose that if there had been an unusual bump, it would not have been ascertained when the pumps were put on at four o’clock, 14 hours after the barge got into the dock, possibly two or three hours after the bump, certainly at least 14 hours after the bump; I feel a difficulty in supposing that it would not have been discovered that there was more than the normal amount of leakage with this particular barge.’ It was further held that, on the true construction of the policy, the clause set out above did not cover a loss due to wear and tear. On this point Scrutton LJ, “11 said: “The Act says: ‘“Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear’’; and giving the best consideration I can to the matter, the policy does not seem to provide otherwise; it does not seem to me to provide that the insurer is liable for ordinary wear and tear. It would be very unusual that he should be, and I can find no words which do make him liable for ordinary wear and tear. The result will be, of course, that if the assured on this policy says: “‘I claim for total loss”’, the answer is that in the first part of the clause the total loss is only a total loss caused by the perils in the policy, which do not include wear and tear. If, as [Counsel] concluded in his argument, he says: ‘‘Very well, if 1cannot get total loss, then I want the loss as partial under the latter part of the clause, by sinking,” the answer seems to me again to be the same, that it is only sinking by perils insured against, and ordinary wear and tear is not one of the perils insured against in the body of the policy.’ Again, in Capital Coastal Shipping Corpn and Bulk Towing Corpn v Hartford Fire Insurance Co (United States ofAmerica, Third Party): The Christie,'* where a tug sank and the assured claimed under the policy for a loss by perils ofthe sea, the District Court for the Eastern District of Virginia, Norfolk Division, gave judgment’? for the insurers for, on the evidence, she had sunk through ordinary wear and tear.'* 8 Scrutton, Greer and Slesser LJJ. ® (1918) Lloyd’s List and Shipping Gazette, 10 April 1918: [1955] 2 Lloyd’s Rep at 391n. 10 [1958] 1 Lloyd’s Rep 546, QBD (Com Ct). 11 Thid, at 289. See also the judgment ofGreer LJ, ibid, at 289-290, and that ofSlesser LJ, ibid, at 290-291. 12 [1975] 2 Lloyd’s Rep 100. 13 See the judgment of Hoffman DJ, ibid, at 104. 14 The evidence is set out ibid, at 101—104. 250 The exveptions : In Prudent Tankers Ltd SA v Dominion Insurance Co Ltd, The Caribbean Sea'* in the course of a voyage in the Pacific Ocean off the coast of Nicaragua, the vessel sank although the wind was Force 4 the weather fine and the sea and swell moderate. When the assured claimed for a loss under the policy, the insurers repudiated liability on the ground that it was caused by ordinary wear and tear. Robert Goff J, held that the claim succeeded for, on the evidence, '® the loss was not due to that cause but to a ‘latent defect in the machinery or hull’, consisting of a defect in a wedge-shaped nozzle joined to the vessel’s plate, and that loss was covered by the policy.'* In Rhesa Shipping Co SA v Edmunds, The Popi M'® the insurers contended that a vessel which sank in the Eastern Mediterranean in calm seas and fair weather was lost due to her defective deteriorated and decayed condition. Bingham J, rejected this submission and held that, on the evidence, '® the loss of the vessel was due to perils ofthe sea for the cause of water entering her was contact with a submerged submarine.*° The House of Lords,”' however, reversed the decision on the ground that the burden ofproving that the loss was caused in this way lay on the assured, and they had failed to discharge it.?? 5 INHERENT VICE The doctrine of proximate cause involves the further proposition that the insurer is not liable for the loss occasioned by any inherent vice in the thing itself, eg spontaneous combustion, disease, decay or fermentation. Thus, s 55(2)(c) of the Marine Insurance Act 1906 states: “Unless the policy otherwise provides, the insurer is not liable for . . . inherent vice or nature of the subject-matter insured . .’ Willes J, said in Blower v Great Western Rly Co:' ‘By the expression “‘vice” is meant only that sort of vice which by its internal development tends to the destruction or the injury of the animal or thing to be carried.’ Thus, in Boyd v Dubois” the insurer was held not liable for the spontaneous combustion of flax put on board in a damp condition. In Wilson, Holgate & Co Ltd v Lancashire and Cheshire Insurance Corpn Ltd? 657 barrels of palm oil were insured for a voyage from Singapore to Liverpool. On arrival at Liverpool 107 of the casks were found to be in a very damaged condition, and there had been a leakage of about 4 per cent of the oil. When *S [1980] 1 Lloyd’s Rep 338, QBD (Com Ct). 1© The evidence is set out ibid, at 347-348. 17 As to this aspect of the case, see p 160, ante. 1 [1983] 2 Lloyd’s Rep 235, QBD (Com Ct). 1 o@ For the evidence, see ibid, at 248. 20 The insurers also contended that the vessel was lost through the negligence of the crew and that there had been a ‘want ofdue diligence’ on the part of the assured. As to this aspect of the case, see p 170, ante. Lord Fraser of Tullybelton, Lord Diplock, Lord Roskill, Lord Brandon of Oakbrook and Lord Templeman. 2 we wo = (1985) Financial Times, 22 May. (1872) LR 7 CP 655 at 662. ‘ (1811) 3 Camp 133. See also Koebel v Saunders (1864) 17 CBNS 71. (1922) 13 LIL Rep 486, KBD. Inherent vice 251 the assured claimed for a loss under the policy, the insurers denied liability* on the ground that the loss was due to the insufficiency of the casks, ie inherent vice. Bailhache J, held that the damage was due to bad stowage and not to inherent vice, and observed:° ‘The first thing I have to determine is what was the cause of this leakage and the state of the casks when they arrived at Liverpool. I have come to the conclusion that the cause ofitwas the way in which and the hold in which these goods were stowed. Palm oil is a substance which has the consistency ofthick grease. It is the sort of stuff you see put into the axle-boxes of railway carriages, and if stowed in a suitable hold with suitable ventilation and away from heat, when coming from a hot sea into a cold sea, has a tendency not to get more liquid but to get more solid. Palm kernel oil is a liquid oil which will penetrate almost anything. On the facts I have come to the conclusion that the barrels were in sufficiently good order when the consignment left Singapore, and the state in which they arrived was not due to the fact that the oil was originally packed in inefficient barrels.’ In ED Sassoon & Co Ltdv Yorkshire Insurance Co® 70 tin-lined cases ofcigarettes were insured from Glasgow to Baghdad. The policy covered the ordinary marine risks and also damage by fresh water, mould or mildew. When the cases arrived at Baghdad, the cigarettes were mildewed and the tin linings of the cases were rusty on the inside and on the outside as well. When the assured claimed under the policy, they were met with the defence that the damage by mildew was due to an inherent vice in the goods. The Court of Appeal’ held that the claim succeeded because the loss was not due to inherent vice, but was due to a fortuitous risk covered by the policy. Bankes LJ, observed:® ‘The [assured] by their evidence did negative the suggestion that the mischief arose as the result of inherent vice. The learned Judge did not find definitely what the cause of the mischief was, but he appears to have been strongly influenced by the evidence ofone of the witnesses who suggested the cause ofthe mischief was condensation on the outside ofthe tin case which rusted through the tin as I understand it, and caused the rusty appearance both on the inside and outside ofthe tin lining and, as the result of that, moisture was admitted to the interior of the tin which caused the growth ofthe spores. The learned Judge did not definitely find that as the cause but he did find in favour of the assured that the two causes which were said to have operated necessarily to produce the mould or mildew complained of had no existence in fact. Under those circumstances, have the [assured] established their case? Have they established that the damage complained of was the result of some fortuitous circumstance and not the result of inherent vice? In my opinion they have.’ In Bird’s Cigarette Manufacturing Co Ltd v Rouse? cigarettes were insured for a voyage from London to Cologne, and were found to be mildewed. The insurers refused to indemnify the assured on the ground that the loss had been caused by inherent vice. Bailhache J, held that this defence only partly succeeded, for while it was true that some ofthe cigarettes contained more moisture than they should have done for safe keeping and were foredoomed to mildew, others had been damaged by salt water,'° and for such damage the insurers were liable. 4 Other defences were that the goods were not properly described in the policy, and that there was non-disclosure ofa material fact, viz the existence of another policy in respect of the goods, and the condition ofthe casks as stated in the bill of lading. As to these defences, see p 276, post, and pp 64-65, ante, respectively. (1922) 13 LIL Rep 486 at 487. (1923) 16 LIL Rep 129, CA. Bankes, Scrutton and Atkin LJJ. (1923) 16 LIL Rep 129 at 130. See also the judgment of Scrutton LJ, ibid, at 132-133, and that ory nw of Atkin LJ, ibid, at 133. 9 (1924) 19 LIL Rep 301, KBD. 10 As to the evidence, see ibid, at 302-303. 252 The exceptions In C T Bowring & Co Ltd v Amsterdam London Insurance Co Ltd'' some consignments of Chinese groundnuts were insured from Tsingtao to European ports. The policies covered the goods against the usual marine risks, and contained the following clause: ‘To pay average and/or damage from sweating and/or heating when resulting from external cause if amounting to three per cent on each bag or on the whole.’ On arrival at various European ports the groundnuts were found to be damaged to a considerable extent by heating due to moisture. On a claim being made by the assured in respect of the loss, WrightJ, held that the action failed because the heating was due to internal moisture, ie inherent vice,'? and that the clause set out above protected the insurers from liability, and observed:'? ‘It seems to me, therefore, that the only explanation of the damage observed at the ports of discharge, the only explanation which fits in with all the theories and conditions to be considered, is the explanation which meets with the approval of the practical men; and the explanation is that the damage was solely and entirely due to the condition in which the goods where shipped.’ In Whiting v New Zealand Insurance Co Lid‘* a cargo of paper hats shipped in wooden cases was insured under a policy containing a ‘warehouse to warehouse’ clause for a voyage from Kobe (in Japan) to London. On arrival some ofthe contents ofthe cases were found to be mouldy. When sued under the policy, the insurers denied liability on the ground that the damage had been caused by inherent vice. Evidence was given that other consignments had arrived in sound condition. Roche J, held that the action succeeded. The mould was the result of fresh water damage sustained by the wooden cases on the quay before shipment.’° His Lordship observed:'® ‘That which happened must have happened when they were on the quay before they were carried into the ship or in the lighter. I think there was wet on the quay which affected these cases, and from the cases went into the goods themselves in the form of moisture. I do not mean in the form of running water. The wet which affected the cases would set up that moist atmosphere which is shown to encourage the growth ofthis fungus, mould. Moisture of that sort originated in most ofthe cases through fresh water. Standing in pools on the quay is a peril which is insured against. Accordingly, I hold that the [insurers] are liable for damage occasioned by that cause.’ In Gee and Garnham Ltd v Whittall’’ 17 consignments of 112,000 aluminium kettles were insured under an “all risks’ policy from Hamburg to the United Kingdom. The Institute Cargo Clauses (Wartime Extension) were incorporated into the policy. Clause 6 of those clauses stated: ‘This insurance shall in no case be deemed to extend to cover loss damage or expense proximately caused by delay or inherent vice or nature of the subject-matter insured.’ "t (1930) 36 LIL Rep 309, KBD. ‘2 The evidence is set out ibid, at 320-324. "3 Ibid, at 324. ‘# (1932) 44 LIL Rep 179, KBD. The case also concerned the measure of indemnity. As to this aspect, see pp 433-434, post. *S (1932) 44 LIL Rep 179 at 180. "© Tbid, at 180. 7 [1955] 2 Lloyd’s Rep 562, QBD. Inherent vice 253 On arrival some of the kettles were found to be dented and others waterstained. SellersJ,considered that they were made of very thin metal, and that it was quite possible that some of the damage had been caused by uneven distribution or inadequate provision of wood wool resulting in pressure of one metal part against another during the handling of the goods.'® Inadequate packing constituted ‘inherent vice’, and accordingly he gave judgment for the insurer, who had been sued for a loss under the policy. His Lordship observed:'® ‘In those circumstances, I have come to the conclusion that the claim here of the underwriters that the damage in the bulk of the cases was due to the inadequate packing or even before transit started at all has been made out; and, inadequate packing, of course, brings the case under the plea of inherent vice in the goods.’ The learned Judge found that the stains on the kettles had been ¢aused by the use of wood wool which was too wet because it had not been properly seasoned. *° This too constituted ‘inherent vice’ for which the insurer was not liable. In F Berk W & Co Ltd v Style? the assured claimed to recover from the insurers the expenses of re-bagging and landing a cargo of kieselguhr? packed in paper bags, which burst whilst being transferred from the ship’s hold to a lighter. The goods were insured on a voyage from Mostaganem to London against all risks of loss and/or damage from whatsoever cause arising. The policy incorporated the Institute Cargo Clauses (Wartime Extension), clause 6 of which stated: ‘This insurance shall in no case be deemed to extend to cover loss damage or expense proximately caused by delay or inherent vice or nature of the subject-matter insured.’ The insurers denied liability on the ground that the kieselguhr was packed in paper bags, which were defective and inadequate to withstand the ordinary incidents of the transit in that the seams opened, because there was no adhesive or inadequate adhesive matter to keep them firmly closed and the contents secure during ordinary and necessary handling and carriage. Sellers J, gave judgment for the insurers. He said that the subject-matter insured was kieselguhr packed in paper bags, and that the bags were defective on shipment,* and observed:° ‘Notwithstanding the affidavit evidence about the bags used, and the samples recently sent to the plaintiffs and produced in court, I find that the [assured’s] consignment ofkieselguhr was packed in faulty and inadequate bags which leaked because they were insufficient to endure the ordinary contemplated handling and carriage. The faults in the manufacture ofthe bags could be accounted for by a failure in the machine or in the processes or by the inexperience or negligence of an operative or operatives concerned with making them; but whatever the cause, I find that the evidence establishes that the bags must have been inadequate from the outset.’ 18 As to the evidence of this point, see ibid, at 567-568. '9 As to the evidence of this point, see ibid, at 569. 20 For the evidence on this point, see ibid, at 569-570. ! The learned Judge, however, held that as regards a small proportion of the consignment which was wet-stained, there was evidence that it might have been wetted by rain while on the quay in London, and that such damage was recoverable. See ibid, at 570-571. 2 [1955] 2 Lloyd’s Rep 382, QBD. 3 Te a diatomaceous earth, used as an absorbent of nitro-glycerine in the manufacture of dynamite: Shorter Oxford English Dictionary (3rd edn, revised 1964), Vol I, p 1084. 4 As to the evidence on this point, see [1955] 2 Lloyd’s Rep at 386—-387. > Tbid, at 387. 254 The exceptions Contracting out of the protection of the Act Section 55(2)(c) of the Marine Insurance Act 1906 contemplates that the parties may contract out of the statutory protection with regard to a loss due to the inherent vice of the goods.° Thus, in E D Sasson & Co Ltd v Yorkshire Insurance Co,’ Atkin LJ, said (obiter) :® ‘T think it is quite plain from the words of the Marine Insurance Act, s 55, sub-s 2(c) that a policy may provide, if it is done in express*words, for the insurer being liable for losses which are excepted, the ordinary wear and tear, ordinary leakage and breakage and inherent vice from the nature ofthe subject-matter insured. The particular kind ofloss, the amount of the loss, is one which, within the words of Lord Sterndale, is a loss that may or may not happen and not one which certainly must happen; if it was a loss which certainly must happen within the voyage, I doubt whether it could ever be made properly the subject-matter of a policy of insurance. It seems to me conceivable if apt words are used, that an assured might cover a loss occasioned by mould which he does not know enough about to know whether it will or will not happen during the voyage, and which, in fact, may happen during the voyage but which may not happen during the voyage.’ In Dodwell & Co Ltd v British Dominions General Insurance Co Ltd,’ the assured were importers of two shipments of barrels of oil carried from Hankow, including transhipment at Shanghai to the United Kingdom. In the course of the transit there was a very serious and abnormal leakage ofoil from the barrels. Heat on the voyage caused the staves of the barrels to shrink, and loosened the hoops. This was accentuated by the prolonged voyage and perhaps bad stowage. The two policies sued on covered all risks, ie war risks, general marine risks and particularly leakage. Bailhache J, gave judgment for the assured for the loss occasioned by the leakage, in so far as it was in excess of the ordinary leakage, under one policy. But in the case of the other policy the insurers had used the words ‘including risk of leakage from any cause whatsoever’. His Lordship held them bound by their own expression, and said that the words ‘clearly included all leakage to which these barrels of oil were subjected’. Accordingly, under the second policy the insurers had to pay for the whole of the leakage proved. In Overseas Commodities Ltd v Style'® a consignment of tins of pork had been insured from France to England. The principal question was whether the assured had complied with a warranty that all the tins were marked by the manufacturers with a code for verification of the date of manufacture.'* But another matter which arose in the case was the interpretation of a clause’? in the policy which stated that the perils insured against were: For an American case where a boat was insured under a policy covering ‘latent defects’, see Robert A Parente v Bayville Marine Inc and General Insurance Co ofAmerica [1975] 1 Lloyd’s Rep 333, State of New York Supreme Court (Appellate Division), where it was held that a latent defect was one which could not be discovered by any ordinary test. (See the judgment of Judge Hopkins, ibid, at 333.) . 7 (1923) 16 LIL Rep 129, CA. 8 Thid, at 133. ° (1918) Lloya’s List and Shipping Gazette, 10 April 1918: [1955] 2 Lloyd’s Rep 391n. *© [1958] 1 Lloyd’s Rep 546, QBD (Com Ct). 'T As to this point, see pp 292-293, post. ‘2 Counsel for the assured said that this was the first case in which a policy, which specifically insured against inherent vice, had fallen to be decided. It was shown in the course of the trial that at the time in question it was the established practice in the United Kingdom, as between Inherent vice 255 ‘All risks of whatsoever nature and/or kind. Average irrespective of percentage. Including blowing oftins. Including inherent vice and hidden defect. Condemnation by authorities to take place within three months of the date of arrival in final warehouse in the United Kingdom but not exceeding five months in all from the date of manufacture.’ McNair J, said’? that the policy, though it retained in the printed Institute Cargo Clauses (Extended Cover) a clause expressly excluding inherent vice, did in terms specially devised by the typed words defining the scope of the policy, contract out of the statutory protection, as s 55(2)(c) of the Act of 1906 contemplated might be done. But, in view of this departure from the normal form of cover, it was not unreasonable to suppose that the insurers would seek to limit the extension within certain bounds. The critical question was whether by the words used they had done so, or whether they had added a further peril in addition to inherent vice. His Lordship held (obiter)'* that it was clear that ‘condemnation by authorities’ meant condemnation on the grounds of unfitness for human consumption. Further, the words plainly imported a condition or qualification upon that which had gone before (ie ‘Including blowing of tins. Including inherent vice and hidden defect’), and, as a matter of construction, they were the equivalent of ‘Provided that condemnation takes place’.’* On this part of the case he concluded:'® ‘Furthermore, having regard to the peculiar nature of the subject-matter—namely, a pasteurized and not wholly sterilized pig product—it seems inconceivable that the underwriters should, with their eyes open, have accepted liability for loss by inherent vice developing at any time in the future, since such a product must inevitably, if not consumed within a limited period, suffer loss from inherent vice, for, being perishable, it necessarily contains the seeds of its own ultimate destruction.’ His Lordship also added’ that if the solving of this question had been material for his judgment, he would have accepted the argument of Counsel for the insurer that if the assured claimed for a loss by inherent vice or hidden defect, he must show condemnation within the specified limits. He said (obiter)'® that for the purpose of the policy there was a ‘condemnation by authorities’ when the local inspecting officer certified that the goods in question were unfit for human consumption. The words were not to be construed strictly, and there was no need for the full procedure laid down bys 10 of the Food and Drugs Act 1938 to be carried out, viz the bringing ofthe food before the Justices of the Peace by the authorised officer of the local authority so that it could be condemned. In Soya GmbH Mainz Kommanditgesellschaft v White’? where a cargo of soya beans was insured against ‘heat, sweat and spontaneous combustion’, the House the importer and the first wholesaler, for the importer to agree to indemnify him in respect of any tins condemned by the local authority as unfit for human consumption within ninety days from the date of the invoice. It was to protect themselves against this risk that the assured as importers had taken out the policy of insurance. 13 [1958] 1 Lloyd’s Rep 546 at 560. 14 'S "6 17 18 19 Thid, at 560. Tbid, at 560. Thid, at 560. Tbid, at 560. Tbid, at 560-561. [1983] 1 Lloyd’s Rep 122, HL. 956 The exceptions of Lords?° held that by those words the policy ‘otherwise provided’ so as todisplace the prima facie rule laid down in s 55(2)(c) of theAct that the insurer was not liable for loss through inherent vice.’ 6 OTHER PERILS EXCEPTED ACT 1906 BY THE MARINE INSURANCE Section 55(2)(c) of the Marine Insurance Act 1906 states: ‘Unless the policy otherwise provides, the insurer is not liable for . . . ordinary leakage and breakage ... of the subject-matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils.’ II EXCEPTIONS UNDER THE INSTITUTE CLAUSES Various exceptions are to be found in the Institute Clauses and their extent depends on whether the particular set of clauses is concerned with the insurance of cargo, or hulls or freight. 1 CARGO CLAUSES a The Institute Cargo Clauses (A) The Institute Cargo Clauses (A),** contain: i ii iii iva a general exclusions clause; an unseaworthiness and unfitness exclusion clause; a war exclusion clause; and strikes exclusion clause. It will be observed that many of the exceptions under these clauses are substantially the same as those to be found in the Marine Insurance Act 1906.7? 2 General exclusions clause By this clause the insurers exclude liability for a loss, damage or expense attributable to the wilful misconduct of the b_ ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear of the subject-matter insured; loss, damage or expense caused by insufficiency or unsuitability of packing’ or preparation of the subject-matter insured; loss, damage or expense caused by inherent vice or nature of the subject-matter insured; assured; c d_ 2° Lord Diplock, Lord Keith of Kinkel, Lord Scarman, Lord Roskill and Lord Templeman. 21 At p 126. 22 See Appendix III, pp 516-519, post. 23 See pp 225-256, ante. ‘Packing’ is deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to the attachment of the insurance or by the assured or their servants. Cargo: clauses e 257 loss, damage or expense proximately caused by delay, even though the delay caused by a risk insured against except expenses payable as a result of general average and salvage charges; f g loss, damage or expense arising from insolvency or financial default of the owners, managers, charterers or operators of the vessel; and loss, damage or expense arising from the use of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter. a Unseaworthiness and unfitness clause By this clause the insurers exempt themselves from liability for loss, damage or expense arising from: 4 a unseaworthiness of vessel or craft; or b unfitness of vessel, craft, conveyance, container or liftvan for the safe carriage of the subject-matter insured, where the assured or their servants are privy to such unseaworthiness or unfitness at the time the subject-matter insured is loaded in it. But the insurers waive any breach of the implied warranties of the seaworthiness of the ship and fitness of the ship to carry the subject-matter insured to the destination unless the assured or their servants are privy to such unseaworthiness or unfitness. 1 =War exclusion clause This clause states that in no case does the insurance cover loss, damage or expense caused by a b c wv war, civil war, revolution, rebellion, insurrection’ or civil strife arising therefrom, or any hostile act by or against a belligerent power; capture, seizure, arrest or detainment (piracy excepted) and the consequences thereof or any attempt thereat; and derelict mines, torpedoes, bombs or other derelict weapons of war. Strikes exclusion clause This clause exempts the insurers from liability for loss, damage or expense a b c b caused by strikers, locked-out workmen or persons taking part in labour disturbances, riots or civil commotions; or resulting from strikes, lock-outs, labour disturbances, riots or civil commotions; or caused by any terrorist or any person acting from a political motive. The Institute Cargo Clauses (B) and (C) The Institute Cargo Clauses (B)* and (C)* contain the same four clauses as in the Institute Cargo Clauses (A) except that ? For the meaning ofthis term, see Ivamy, General Principles ofInsurance Law (4th edn, 1979) p 280. > See Appendix III, pp 519-523. * See Appendix III, pp 525-528. 258 The exceptions i to the ‘General exclusions clause’ is added a further exception which states that the insurers will not be liable for ‘deliberate damage to or deliberate destruction of the subject-matter insured or any part thereof by the wrongful act of any person or persons.’ ii c in the ‘War exclusion clause’ the exception of detainment also excludes liability for detainment caused by piracy. The Institute War Clauses (Cargo) i The Institute War Clauses (Cargo)° contain a b c ii b d_ derelict mines, torpedoes, bombs or other derelict weapons of war. the insurers from loss, damage, strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions; and any terrorist or any person acting from a political motive. A ‘malicious acts’ exclusion clause states that the policy does not cover loss, damage or liability or expense arising from a_ b iv those set out in the Institute Cargo Clauses (B)® and (C),’ but does not cover any claim based on loss or frustration of the voyage or adventure; an unseaworthiness and unfitness exclusion clause in the same form as in the Institute Cargo Clauses (A),® (B)? and (C)'° thereof or any attempt thereat; <A ‘strikes exclusion’ clause exempts liability or expense caused by a_ iii a ‘general exclusions’ clause which sets out the same exceptions as the detonation of an explosive. any weapon of war. and caused by any person acting maliciously or from a political motive. A ‘nuclear exclusion’ clause states that in no case does the policy cover loss. The Institute Strikes Clauses (Cargo) These clauses’’ contain a ‘general exclusions clause’ and an ‘unseaworthiness and unfitness exclusion clause’. 1 (1) . . . General exclusions clause This clause’? 2 exempts the insurers from liability for Pee ae al Be See Appendix III, pp 528-531, post. See pp 257-258, ante. See pp 257-258, ante. See pp 256-257, ante. ° See pp 257-258, ante. '° See pp 257-258, ante. "' See Appendix III, pp 528-532, post. ornaiwn "2 See Institute Strike Clauses (Cargo),.cl 3. a ee Cargo clauses 259 loss damage or expense attributable to wilful misconduct of the il ill iv Vi vil Vlll 1X (2) assured; ordinary leakage, ordinary loss in weight or volume or ordinary wear and tear of the subject-matter insured; loss, damage or expense caused by insufficiency or unsuitability of packing’? or preparation of the subject-matter insured; loss, damage or expense caused by inherent vice or nature of the subject-matter insured; loss, damage or expense proximately caused by delay, even though the delay is caused by a risk insured against (except expenses payable as a result of general average and salvage charges) ; loss, damage or expense arising from insolvency or financial default of the owners, managers, charterers or operators of the vessel; loss, damage or expense arising from the absence, shortage or withholding of labour of any description whatsoever resulting from any strike, lock-out, labour disturbance, riot or civil commotion; any claim based on loss of or frustration of the voyage or adventure; loss, damage or expense arising from the use of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter; and loss, damage or expense caused by war, civil war, revolution, rebellion, insurrection or civil strife arising therefrom, or any hostile act by or against a belligerent power. Unseaworthiness and unfitness clause This clause’* is in the same form as the Institute Cargo Clauses (A),'* (B)'® and (C),'’ and the Institute War Clauses (Cargo).'® 2 HULL CLAUSES The Institute Time Clauses (Hulls)'? and the Institute Voyage (Hulls)?° each contain the same clauses excepting liability: i il ili lv Clauses War exclusion clause; Strikes exclusion clause; Malicious acts exclusion clause; Nuclear exclusion clause; Vv Navigation clause; and vi Three-fourths collision liability clause. '3 «Packing’ is deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of the insurance or by the assured or their servants. 14 See Institute Strike Clauses (Cargo), cl 4. 15 See pp 516-519, post. 16 See pp 519-523, post. 17 18 19 20 See pp 523-526, post. See pp 526-529, post. See Appendix III, pp 533-540, post. See Appendix III, pp 540-547, post. ny 260 The exceptions 1 War exclusion clause This clause’ states: ‘In no case shall this insurance cover loss, damage, liability or expense caused by war, civil war, revolution, rebellion, insurrection or civil strife arising therefrom, or any hostile act by or against a belligerent power. capture, seizure, arrest, restraint or detainment consequences thereof or any attempt thereat. (barratry and piracy excepted) and the derelict mines, torpedoes, bombs or other derelict weapons of war.’ 1 Strikes exclusion clause This clause? states: ‘In no case shall this insurance cover loss, damage, liability or expense caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions. any terrorist or any person acting from a political motive.’ 1 ~=Matlicious acts exclusion clause This clause? states: ‘In no case shall this insurance cover loss, damage, liability or expense arising from the detonation of an explosive any weapon of war and caused by any person acting maliciously or from a political motive.’ iv Nuclear exclusion clause This clause* states: ‘In no case shall this insurance cover loss, damage, liability or expense arising from any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.’ v Navigation clause This clause? states: ‘In the event ofthe vessel being employed in trading operations which entail cargo loading or discharging at sea from or into another vessel (not being a harbour or inshore craft no claim shall be recoverable under this insurance for loss or damage to the Vessel or liability to any other vessel arising from such loading or discharging operations, including whilst approaching, lying alongside and leaving, unless previous notice that the Vessel is to be employed in such operations has been given to the Underwriters and any amended terms of cover and any additional premium required by them have been agreed.’ a See Institute Time Clauses Hulls), cl 23, and Institute Voyage Clauses (Hulls), cl 20. Hulls), cl 24, and Institute Voyage Clauses (Hulls), cl 21. (Hulls), cl 25, and Institute Voyage Clauses (Hulls), cl 22. See Institute Time Clauses Zp ' See Institute Time Clauses See Institute Time Clauses (Hulls), cl 26, and Institute Voyage Clauses (Hulls), cl 23. Institute Time Clauses (Hulls), cl 1, and Institute Voyage Clauses (Hulls), cl 1. nF WN Hull clauses vt 261 The three-fourths collision liability clause This clause® states that in no case does it extend to a b removal or disposal of obstructions, wrecks, cargoes or any other thing whatsoever; any real or personal thing whatsoever except other vessels or property c the cargo or other property on or the engagements of the insured on other vessels. vessel. d e loss of life, personal injury or illness. pollution or contamination of any real or personal property or thing whatsoever (except other vessels with which the insured vessel is in collision or property on such other vessels). Institute War and Strikes Clauses (Hulls) (Time) and Institute War and Strikes Clauses (Hulls) (Voyage) These clauses’ include exceptions stating that (inter alia) the insurers are not responsible for loss, damage, liability or expense arising from 1 any detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter. 2 3 4 5 6 7 the outbreak of war (whether there be a declaration of war or not) between any of the following countries: United Kingdom, United States of America, France, the Union of Soviet Socialist Republics, the People’s Republic of China. requisition or pre-emption; capture, seizure arrest, restraint detainment, confiscation or expropriation by or under the order of the government of any public or local authority of the country in which the Vessel is owned or registered; arrest, restraint, detainment, confiscation or expropriation under quarantine regulations or by reason ofinfringement of any customs or trading regulations; the operation of ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause; piracy. In Panamanian Oriental SS Corpn v Wrght® a vessel was insured under a policy which excluded liability for loss arising from (inter alia) ‘arrest, restraint or detainment under quarantine regulations or by reason ofinfringement of any customs regulations.’ The vessel was boarded by Vietnamese customs officials. Unmanifested goods were found on board. A special military court acquitted the master of smuggling offences, but convicted some of the crew. The vessel was ordered to be confiscated. When the assured claimed for a loss under the policy, the © Institute Time Clauses (Hulls), cl 8, and Institute Voyage Clauses (Hulls), cl 6. 7 See Appendix III, pp 547-548, 549-554, post. 8 [1971] 1 Lloyd’s Rep 487, CA. 962 The exceptions insurers repudiated liability on the ground that the exception was set out above applied. The Court of Appeal? held that they were entitled to do so, for they had proved the breach ofcustoms regulations, and that the confiscation was the result of it. It was unnecessary for them to show that the special military court acted in good faith within its jurisdiction and free from political interference. as 3. FREIGHT CLAUSES a Institute Time Clauses (Freight) and Institute Voyage Clauses (Freight) The Institute Time Clauses (Freight)'’ and the Institute Voyage Clauses (Freight)'? each contain the same exceptions as those in the Institute Time Clauses (Hulls)'* but in addition state ‘This insurance does not cover any claim consequent on loss of time whether arising from a peril of the sea or otherwise.’ In Bensaude & Cov Thames and Mersey Marine Insurance Co'* a freight policy was effected in respect of a vessel under a charter-party. The policy contained a clause stating ‘free from any claim consequent on loss of time, whether arising from a peril of the sea or etherwise’. The vessel broke down after being at sea for a day. On putting back to a port for repairs it was seen that the time that they would take would destroy the adventure. Consequently the charter-party was cancelled by the chartegers. The owners sued on the policy for a total loss of freight. It was admitted that the vessel had been disabled consequent on a peril of the sea. It was held that the claim arose by reason of a loss of time, and that the loss of time was occasioned by a peril of the sea, and that the insurers were not liable. Again, in Turnbull, Martin & Co v Hull Underwriters’ Association’* the policy was upon ‘freight of frozen meat, chartered or as if chartered’. The refrigerating apparatus of the vessel was destroyed by fire before arrival at the port of loading, thereby rendering it impossible to carry the frozen meat. It was held that the claim made under the policy was ‘consequent on loss of time’ within the meaning ofthe clause, and the fact that the freight was not chartered freight made no difference, having regard to the words ‘chartered or as if chartered’. In Atlantic Maritime Co Inc v Gibbon,'® where a vessel was prevented from entering the port of Taku Bar by the presence of aChinese Nationalist warship during the civil war and it was held that this constituted a restraint of princes, the Court of Appeal’’ also held that the assured’s claim for a loss under a freight ° Lord Denning MR, Fenton Atkinson LJ, and Sir Gordon Willmer. 10 See the judgment of Lord Denning MR, [1971] 1 Lloyd’s Rep at 493, that of Fenton Atkinson LJ, ibid, at 495, and that of Sir Gordon Willmer, ibid, at 495. 'T See Appendix III, pp 550-554, post. '2 See Appendix III, pp 555-558, post. '> See Appendix III, pp 533-540, post. "4 [1897] AC 609. *S [1900] 2 QB 402. See also Russian Bank ofForeign Trade v Excess Insurance Co [1918] 2 KB 123. Cf _ Asfar © Co v Blundell [1896] 1 QB 123. © [1953] 2 Lloyd’s Rep 294, CA. "7 Sir Raymond Evershed MR, Jenkins and Morris LJJ. Freight clauses 263 policy was barred by a ‘frustration’ clause. '® The policy also contained a clause stating: ‘Warranted free from any claim consequent on loss of time whether arising from a peril of the sea or otherwise.’ Sir Raymond Evershed MR, said obiter'® that it was unnecessary for him to -express a final view on the matter, but said that he considered that the clause did not apply to a case like the present one. Here the time element was relevant,' not as a consequence of the mishap, but in order to ascertain correctly the nature and quality of the accident. He then continued:? ‘If, because of the length of time which is likely to subsist during which the peril lasts, it is justifiable to say “This finally disposes of the bargain’, then the freight is lost then and there immediately upon the happening ofthe insured peril, and is attributable solely to that peril. The time element has only been essential in order to estimate correctly the extent ofthe peril; and if in point offact the peril ceased a week or two weeks afterwards, that fact would be quite immaterial provided that the original decision was held, in the circumstances, to have been reasonably justified.’ Morris LJ, also said* that he considered it unnecessary to express any concluded opinion. If he might treat the matter as an open one as directed by Lord Atkin in Robertson v Petros M Nomikos Ltd* in the sense that the decided cases could merely be regarded as questions of fact which were not to trammel a fresh determination of the facts of a new case, then he expressed the doubt whether on the facts of the present case it could be said that the claim made was one consequent on loss of time.° In Naviera de Canarias SA v Nacional Hispamca Aseguradora SA: The Playa de las Nieves® a vessel was let out under a time-charter-party containing an ‘off hire’ clause by which hire would cease to be payable in the event of abreakdown of machinery. Her owners took out a freight policy containing a clause stating: ‘Warranted free from any claim consequent on loss of time whether arising from a peril ofthe sea or otherwise.’ The vessel sustained damage by breakdown of machinery and had to be repaired. She was ‘offhire’ during this period, and the owners claimed from the insurers the amount of hire which they had lost. The House of Lords’ held that the claim failed for the ensuing loss of hire could not be more appropriately described than as ‘consequent on loss of time’.® Lord Diplock said” that it was a matter of common knowledge that '8 As to the ‘frustration’ clause, see pp 264-267, post. 9 [1953] 2 Lloyd’s Rep at 312. Ibid, at 311. Ibid, at 311. Ibid, at 318. [1939] AC 371 at 377, HL. Jenkins LJ, said [1953] 2 Lloyd’s Rep at 316 that he wished to add nothing to what Sir nak WN = Raymond Evershed MR, had said. © [1977] 1 Lloyd’s Rep 457, HL. 7 Lord Diplock, Viscount Dilhorne, Lord Simon of Glaisdale, Lord Salmon and Lord Fraser of Tullybelton. 8 See the judgment of Lord Diplock: [1977] 1 Lloyd’s Rep at 459. ° Ibid, at 459. Lord Diplock, however, considered that while it was not easy to envisage a case where partial loss of hire under a time charter-party would not be excluded by the clause, general average contribution and salvage charges on chartered freight would be covered by the policy. 264 The exceptions there were available in the market policies which expressly covered loss by delay arising from perils insured against. It was exceptional however, for them to be taken out by shipowners because periods when a vessel came ‘off hire’ during the currency of a time charter-party were by no means uncommon and the uncertainty in the amount of the liability to which the insurer was exposed made the premium required for that type of insurance much higher than for a policy which contained a clause in the same form as in the present case. The premium for the cover on freight in the present case was 1:16 per cent, and represented about one-third of the amount of hire payable for a single day. It was difficult to believe that either shipowners or insurers ever supposed that for the premium cover was being given for | year against loss of hire withheld under the ‘off hire’ clause. b_ Institute War and Strikes (Freight) Clauses The Institute War and Strikes (Freight) Clauses'® contain the same exceptions as those in the Institute War and Strikes Clauses (Hulls-Time)'! but in addition state that the policy excludes liability for ‘any loss based upon loss or frustration of the adventure.’ This clause is known as the ‘Frustration Clause’.!? In Atlantic Maritime Co Inc v Gibbon’? the Court of Appeal’* decided by a majority that the loss of freight was caused by a restraint of princes, but held that the liability of the insurers was excluded by the ‘frustration’ clause. Sir Raymond Evershed MR, stated:’° ‘If the adventure was lost, whether strictly the contract of affreightment was frustrated, by which I mean “‘frustrated”’ according to our law of contract—if the view taken by the master and the owners wasjustified, then the circumstances were such as had the equivalent effect and the adventure was lost—then the freight it would earn would have been lost also. But in my judgment, as I have earlier indicated, if the adventure was so lost, and was lost by reason ofthis interference by the warships, then I have come to the conclusion that the underwriters are absolved from liability by the frustration clause in the policy which I have already read. I repeat its terms here: “Nevertheless this policy is warranted free of any claim based upon loss of, or frustration of, any voyage or adventure caused by . . . restraints. . . of. . . princes’, etc. I think, according to the plain sense of the language and the plain sense ofthe facts, it was on this hypothesis so lost, and the case falls within, and exactly within, the ordinary meaning ofthat paragraph.’ Morris LJ, was of the same opinion, and said:'® ‘The underwriters are, however, in my view relieved from liability by the terms of the clause 10 See Appendix III, pp 558-561, post. 11 See Appendix III, pp 547-549, post. This clause was introduced in policies as a result of the decision of the House of Lords in Britzsh and Foreign Marine Insurance Co Ltd v Sanday & Co [1916] 1 AC 650, where it was held that even though the insured goods were safe, a claim could be based upon loss of the adventure by reason of a peril insured against, viz a restraint of princes. See further, Becker, Gray & Co v London Assurance Corpn [1918] AC 101, HL. The history of the clause is summarised in Lord McNair and A D Watts, Legal Effects of War (4th edn, 1966), pp 270-275. 13 [1953] 2 Lloyd’s Rep 294, CA. The facts of this case are set out at pp 262-263, ante. Sir Raymond Evershed, and Morris LJ: Jenkins LJ, dissenting on this point. "S [1953] 2 Lloyd’s Rep 294 at 306. ‘© Tbid, at 317. See also the judgment of Jenkins LJ, ibid, at 315, though his remarks were obiter on this point because he said that the loss was not caused by a restraint of princes. Freght clauses 265 which has been called the “frustration clause’. Here the claim ofthe plaintiffs is that they have suffered the loss of the voyage or adventure, the subject of the charter-party of 16 July, and that such loss was caused by the restraint of ““Kings Princes Peoples Usurpers or persons attempting to usurp power”’. That is in reality the claim made by the plaintiffs, even though they choose merely to say that the loss was caused by civil war. The purpose of the words in the frustration clause is to exclude a liability otherwise arising. The word “‘Nevertheless”’ by which the clause is introduced demonstrates that. It seems to me that the only question here is whether these words apply. In my view they do, and the claim made by the plaintiffs is covered by this exception clause which relieves the underwriters from liability.’ Restraint of princes imposed in civil war In Atlantic Maritime Co Inc v Gibbon'’ the assured also contended that, although the prohibition was a restraint ofprinces, the intervention of the destroyers was also an incident or the consequence ofa civil war and a warlike operation, and, as such, sufficed to support a claim based on one or other of those insured perils irrespective of its character as a restraint of princes. Jenkins LJ, refused to accept this contention, and said that if the peril giving rise to the loss was a restraint ofprinces, and the warranty clearly operated as a bar to the claim, it made no difference that the restraint was imposed in the course ofor in consequence ofcivil war. The only action taken by the destroyers relevant to the claim was the prohibition or restraint of loading at Taku Bar. Apart from such prohibition or restraint, there was nothing in their activity (whether regarded as civil war or warlike operations) which could be said to have brought about the loss of freight to which the claim related. The claim could not be effectively formulated otherwise than by alleging the prohibition or restraint. Clearly, the mere fact of civil war or warlike operations did not make performance of the voyage impossible. The vessel had made at least one voyage to and from Taku Bar while the civil war was in progress. The learned Lord Justice then observed:'® ‘Moreover, considering the matter purely as one of construction, I see no ground for construing the reference to restraints as meaning restraints imposed otherwise than in the course of or in consequence of civil war or warlike operations. That mode of construction, carried to its logical conclusion, would for practical purposes nullify the exception, for restraint of princes would seldom if ever occur otherwise than in association with another or others of the various perils insured against.’ Inapplicability to claim for loss of goods themselves In Forestal Land, Timber and Rlys Co Ltd v Rickards*® the policy in respect ofa cargo to be carried from Buenos Aires for Hong Kong/Shanghai contained a clause stating: ‘Warranted free of any claim based upon loss of, or frustration of the insured voyage or adventure caused by arrests restraints or detainments of Kings Princes Peoples Usurpers or Persons attempting to usurp power.’ The vessel carrying the goods deviated, and sought refuge in neutral ports on the orders of theGerman Government. She attempted to get back to Cemnany, but was scuttled by her crew to avoid being captured in the Allied blockade.* 17 [1953] 2 Lloyd’s Rep 294, CA. 18 Thid, at 315. See also the judgment of Sir Raymond Evershed MR, ibid, at 307. ® (1941) 70 LIL Rep 173, HL. 20 The facts of the case are more fully stated at pp 127-128, ante. 266 The exceptions When a claim was made under the policy, the insurers contended that it was barred by the ‘frustration’ clause. The House of Lords’ held that this contention failed. The policies covered both the goods themselves against their destruction, damage or deprivation, and also the expected benefit from their arrival. The ‘frustration’ clause did not operate to exclude a claim for loss ofordamage to the goods themselves, which was notionally severable from a claim for loss of the adventure. Lord Wright? said that the ‘frustration’ clause could not be applied to a case where the assured was claiming for ‘loss of or damage to the actual physical things or chattels. He was entitled to resist the application of the clause on the ground that the primary subject-matter was the goods, and that the adventure was merely ancillary or accessory. A claim in respect of the loss of the adventure was an added benefit granted to the assured over and above his interest in the goods themselves. The exception was expressly by its language limited to the loss of, or frustration of, the insured voyage or adventure. Its language could not be twisted to make it cover a claim for actual loss or damage to the goods themselves. Viscount Simon LC, said? that the proper interpretation of the frustration clause was not ‘free of any claim which on the facts might be based on loss of the insured voyage’. Its proper meaning must be ‘free of any claim which is in fact based and can only be based, upon loss of the insured voyage’. Viscount Maugham said* that he could not see why the assured should not be able to claim an indemnity simply on the basis ofloss of goods, and as if the doctrine ofloss of adventure had never been accepted as part of our maritime law. The contract was an insurance against loss of two different kinds in relation to the goods. The first involved loss or damage to the goods themselves. The second involved merely that they had not reached their destination, though they might be perfectly safe. The ‘frustration’ clause was free from ambiguity. It relieved the insurers from liability in the cases under the second head, but it left their liability unaffected in cases under the first head, provided, of course, that the risk had not come to an end. Some importance must be _attributed to the fact that the clause was limited to claims ‘based upon’ the loss of or frustration of the insured voyage.” The words, in their natural meaning, pointed to the way in which the claims were framed, and could not easily be read as extending to claims which might truly be said to be occasioned by the loss of or frustration of the adventure, but were really based upon the loss of or damage to the goods themselves. Lord Porter said® that once the master sailed for a German port the goods were a constructive total loss at a moment when they were still being carried in the vessel and on the voyage insured in the policy. It was true that the adventure was put an end to by that loss, but the adventure was lost through the loss of the goods. The goods were not lost by reason ofthe loss of the adventure. The ‘frustration’ clause therefore had no application to the circumstances of the case. It was meant to deal, and its wording appropriately dealt, with a case where [ot oo Viscount Simon LC, Viscount Maugham, (1941) 70 LIL Rep at 193. Ibid, at 181. + Ibid, at 183. > Ibid, at 184. © Ibid, at 203. Lord Thankerton, Lord Wright and Lord Porter. Freight clauses 267 the assured, if he was to recover at all, must rely upon the loss of the adventure and could not rely upon the loss of the goods. His Lordship said that he would take this view even if the wording of the clause had been ‘frustration of the adventure by restraint of princes always excepted’. But his view was strengthened when he found that the phrase used was ‘warranted free of any claim based upon loss of the adventure’. No doubt it could be said that ‘based upon’ bore the same meaning as ‘founded upon’. But whichever word was used, it was the claim which must be based or founded upon frustration in order to exonerate the insurers. ‘Claim’ suggested the form of claim adopted by the assured, not a possible claim which he might have made had he so desired. Ii OTHER EXCEPTIONS CANCELLATION EXPRESSLY STATED IN THE POLICY CLAUSE Policies on freight often contain a clause stating: ‘No claim arising from the cancelling of any charter shall be allowed.’ Such a clause is intended to apply to the case of charter-parties with cancelling clauses under which the charterer may cancel the charter-party for named causes, the most common ofwhich is the non-arrival ofthe vessel at the port of loading by a specified time. In time charter-parties, the right to freight may continue until cancellation, notwithstanding detention or delay on the part ofthe vessel caused, e g by perils insured against in the policy. In such cases the loss of freight would not arise until cancellation, and would be consequent on the cancellation and not on the peril causing the delay.’ Further, even in a voyage policy the loss of freight will be attributed to the exercise of the option to cancel, although the delay might be due to a peril insured against.® But in a voyage charter-party with no such option the chartered freight may be lost by a peril insured against which detains the ship so long that it would not be reasonable to hold the charterer to his contract to provide a cargo. Insuch a case the insurer would be liable to pay the assured thefreight so lost.” In The Alps'® it was held that where a cesser clause was put into operation through the direct action ofperils insured against, the insurer was liable for the loss of freight. Meaning of ‘cancelling’ The cancellation must arise from some agreement between the parties, made either by a term in the charter-party enabling the charterer to cancel it on the happening of some named event, or by a special agreement arrived at during the existence of the charter-party. But ifno such agreement is made, the charter-party is not ‘cancelled’ and the T Inman SS Co v Bischoff (1882) 7 App Cas 670. 8 Mercantile SS Co v Tyser (1881) 7 QBD 73. ° Fackson v Union Marine Insurance Co (1874) LR 10 CP 125. 10 [1893] P 109. oy 268 The exceptions happening which prevents the vessel earning her freight is not a cancellation within the meaning ofthe clause in the policy, although the event may be such as to relieve the charterer from finding a cargo and from paying the chartered freight. Thus, ifavessel under a charter-party on her way to the port of loading goes to the bottom, or is so delayed that the charterer is released from the obligation of finding a cargo and there is thus a loss of chartered freight, this does not operate as a cancellation of the charter-party under this clause so as to relieve the insurer. Ifit had that effect, a policy on chartered freight with such a clause would be almost valueless to the assured.*? IV QUALIFIED UNDERTAKINGS OF THE INSURER Sometimes the undertaking ofthe insurer is qualified by the terms of the policy. Ifa loss occurs which is outside the scope ofthe limit of the undertaking, there is no liability. Thus, the undertaking of the insurer may be qualified by: The Institute Trading Warranties. Other clauses referring to the area of operation of the insured vessel. Clauses concerning the towing of the vessel. Clauses relating to deck cargo. ON Clauses relating to the experience of the crew. op 1 THE INSTITUTE TRADING WARRANTIES’? These state that the vessel is not covered by the terms ofthe policy ifshe is, eg in the Great Lakes between certain dates or St Lawrence Seaway west of Montreal between certain dates, the Behring Sea. Nor will she be covered if she sails from any port or place in Siberia except Nakhodka and/or Vladivostock. There are certain periods of time in which she will not be covered if she sails with a cargo of Indian coal. 2 OTHER CLAUSES AS TO AREA OF OPERATION In Mountain v Whittle'* a houseboat was insured under a time policy against, inter alia, perils of the sea ‘whilst anchored in a creek off Netley, however employed, with liberty to shift . . . including all risk of docking, undocking, changing docks, and going on gridiron or graving docks as may be required’. The vessel needed cleaning, so the assured arranged for her to be towed to a yard at Northam, which was the nearest place where she could be docked. A tug "! Re Jamieson and Newcastle SS Freight Insurance Association [1895] 2 QB 90. ‘2 These warranties are set out in Appendix III, pp 561-562, post. '3 [1921] 1 AC 615, HL. ; Other clauses as to area of operation 269 was employed for the purpose, but she was too powerful, and an unusually high breast wave from her caused the houseboat to sink. When a claim for a loss by perils of the sea'* was made under the policy, the insurer contended that the loss was not covered because the ‘liberty to shift’ clause and the ‘docking’ clause were not apt to cover a voyage of 7 miles to a different part of the coast. The House of Lords’* held that the claim succeeded. The ‘liberty to shift’ clause was not apt to cover the 7 mile voyage, but the ‘docking’ clause was, for it must be construed as extending the policy to cover a voyage to such a dock or gridiron as a reasonable assured would in all the circumstances be justified in employing. In the present case the assured was justified in employing the dock at Northam. Lord Birkenhead LC, observed:!® ¢ ‘I think that the words “with liberty to shift” are to be construed as an extension of the scope of the policy, which would otherwise only protect the vessel while it was actually anchored in the creek. In other words, if the freedom to shift had not been stipulated for, the vessel would have been unprotected during the innumerable small movements which circumstances may from time to time have required. I do not think that the words were intended to cover a voyage of seven or eight miles to a different part of the coast. But the ‘‘docking” clause must be determined with reference to quite other considerations. No reasonable meaning can be given to the ‘“‘docking”’ clause, unless it is construed as extending the protection to the course of a voyage to a dock or gridiron such as a reasonable owner might in all the circumstances of the case be expected to employ and bejustified in employing. I am not impressed by the arguments used in order to illustrate the supposed extravagant consequences ofthis construction. Ifan insurer extends the protection ofthe vessel insured to a voyage for the purpose of docking the vessel, he may be expected to acquaint himself with the measure of his liability by ascertaining where docks are reasonably to be found and how far the ‘‘changing docks and going on gridiron” to which he has assented will increase his liability, and ought to be reflected in the rate to be charged.’ In Navigators and General Insurance Co Ltd v Ringrose’’ a catamaran had been insured under a dinghy insurance policy ‘whilst within the United Kingdom ashore or afloat’. The assured sailed on a voyage from Teignmouth to the Channel Islands. When the craft was between 25 and 30 miles to the south of Portland Bill, she was dismasted and taken in tow by an Italian tramp steamer, which later claimed a salvage award. This was paid by the insurance company without any admission of liability on the promise of the assured to repay it, if the company were found to be under no liability. The Court of Appeal'® held that the company was not liable under the policy, and consequently could recover from the assured the sum which had been paid, because the place where the casualty happened must determine whether or not the loss fell within its terms. The place where it did happen, being substantially mid-way between England and France, fell outside them for it could not by any test be held to be within the United Kingdom. The court said that it was unnecessary to give a meaning to the words ‘United Kingdom’. Holroyd Pearce LJ, observed’® that it had been suggested in argument that they covered an area within sight of land, a wide area which differed greatly '4 As to this aspect of the case, see pp 148-149, ante. 15 Lord Birkenhead LC, Viscount Haldane, Viscount Finlay, Viscount Cave and Lord Sumner. © [1921] All ER Rep 626 at 629. See also the speech of Viscount Finlay, ibid, at 631, and that of Lord Sumner, ibid, at 633-634. 17 [1962] 1 All ER 97, CA. 18 Holroyd Pearce, Willmer and Davies LJJ. "9 [1962] 1 All ER 97 at 99. 270 The exceptions : according to the type of land, the size of the ship and various physical conditions. In the context of the policy that was a possible contention. It was also suggested that it covered the waters over which Her Majesty claimed jurisdiction. That seemed to him to provide the most clear and ascertainable limitation of the area included in the policy. Willmer LJ, thought?° that there was much to be said for this last view. Davies LJ, felt! that whatever test one chose would give rise to anomalies. If the test of ‘waters over which Her Majesty claims jurisdiction’ were applied, it would do so. On a straight line of coast, presumably, those waters would mean the 3 mile limit. If, in the course of avoyage intended to be within that limit or in the course ofarace intended to be within that area, a vessel were carried, say, a quarter of a mile beyond the limit owing to conditions of wind and tide, to say that, in those circumstances, she would cease to be insured when she sailed more than 3 miles from the shore, would seem to him to be an affront to common sense. In Pearson v Commercial Union Assurance* 2 in a 3 months’ policy against fire the words were ‘on the hull of the SS “Indian Empire” with her tackle furniture and stores on board belonging, lying in the Victoria Dock London with liberty to go into dry dock’. The vessel was so large that she could only go into a dry dock 2 miles up the river, and then it was necessary to remove the lower halves of her paddle-wheels. After repairs she was towed down the river and moored for the purpose of replacing the lower halves of the paddle-wheels. While so moored, she was totally destroyed by fire. It was held that, though the ship would be covered by the policy while in either dock and during transit, yet her mooring was effected for quite another purpose, ie to have her paddle-wheels replaced, and her loss therefore was not covered by the policy. In Bristol SS Corpn v London Assurance and Linard: The Delfini? a vessel was insured under a time policy ‘Whilst at Hirohata within breakwaters ... With leave to shift, in tow or otherwise and including docking, undocking, overhauling, fitting out and whilst on trial trips within port limits...’ During the currency of the policy she was moved to Osaka, where she collided with another vessel and was damaged. When the assured claimed an indemnity under the policy, the insurers contended that they were not liable because they were no longer at risk from the time the vessel left Hirohata. Bonsal DJ, giving judgment in the District Court for the Southern District of New York, accepted this argument and held that the claim failed.* 3 TOWING In Russell v Provincial Insurance Co Ltd> a motor boat was insured under a time policy which provided:°® N ° Ibid, at 100. Ibid, at 100. (1876) 1 App Cas 498. See also Hamilton v Sheddon (1837) 3 M&W [1976] 2 Lloyd’s Rep 741. 49. See the judgment ibid, at 743. [1959] 2 Lloyd’s Rep 275, QBD (Com Ct). The policy was not in common marine form, but was in the company’s own form. See ibid, at 277. ; Dunk wn Towing 271 ‘No claim shall attach to this policy while the vessel is being towed (except as is customary or when in need of assistance), or while undertaking towing or salvage services under a prearranged contract.’ The insured vessel was used for ‘white weeding’.’ She and another motor boat named the ‘Lynn Vivian’ were breasted together, and both used their engines at reduced power, whilst proceeding from Burnham-on-Crouch to Southend. The steering was done from the ‘Lynn Vivian’. The insured vessel bumped on the bottom when the two boats cut across a sandbank. The assured claimed for a total loss, but the insurers denied liability® on the ground that she was ‘being towed’ at the time of the loss. McNair J, held that the claim succeeded: He said that it was customary for vessels to proceed breasted together,’ that that operation did not constitute towing, and that it was an operation which was not excluded from the policy. He observed:'° ‘It was submitted on behalf of the [insurers], with some force, that, even on those findings of fact—that the steering was being done from the other vessel and part of the motive power was being provided by the other vessel—the insured vessel was under tow. But, having regard to the evidence, which I accept, that it is quite common and customary in this trade for these vessels, even though both are perfectly navigable and fit, to proceed in company abreast, economising on fuel by using the two engines and economising in labour by having one man only at the wheel, I think that it is quite wrong on this policy to hold that the operation constitutes towing. If the [insurers] wish to exclude that form ofoperation from this policy, they have got to do it, so far as I am concerned, in very much clearer language than they have done.’ As far as towage is concerned, (Hulls)'* states: clause | of the Institute Time Clauses ‘The vessel is covered .. . at all times and has leave to . . . assist and tow vessels or craft in distress but it is warranted that the Vessel shall not be towed, except as is customary or to the first safe port or place when in need of assistance, or undertake towage or salvage services under a contract previously arranged by the Assured and/or Owners and/or Managers and/or Charterers. This clause shall not exclude customary towage in connection with loading and discharging.’ 4 DECK CARGO In Leopold Walford (London) Ltd v National Benefit Assurance Co Ltd "2 the assured claimed on a declaration under a floating policy for damage to goods carried on deck in a vessel from Liverpool to Bremen. The declaration contained the following words: 7 Te a process of obtaining seaweed or weed from the river and estuary of the Crouch and submitting it to some kind of process when it is eventually sold. See ibid, at 278. 8 Other defences were that she was unseaworthy, and that the loss had been caused by ‘the inexperience of the person in control’. As to these aspects of the case, see pp 300-301, post, and p 272, post, respectively. 9 As to the evidence, see [1959] 2 Lloyd’s Rep 275 at 279. 10 [1959] 2 Lloyd’s Rep 275 at 280. 1! These clauses are set out in Appendix ITI, pp 533-540, post. The relevant clause in the Institute Voyage Clauses (Hulls), the Institute Time Clauses (Freight) and the Institute Voyage Clauses (Freight) is to similar effect. 12 (1921) 7 LIL Rep 39, KBD. . 272 =The exceptions ‘539 bales of cotton. . . . This policy to pay in full up to the amount insured any loss or liability of shipowners in respect of cargo carried on deck for which bills of lading have been given as under-deck.’ It was held by GreerJ,that the action failed because the assured had failed to show that the goods carried on deck were carried on the terms of an under-deck bill of lading. His Lordship observed:'* ‘The [assured] suing upon a document can only sue successfully if they establish a state of facts which entitle them upon the terms of the document to succeed; and in my judgment what the [assured] were insured against was loss on a cargo carried on deck for which bills of lading had been given as under-deck; and unless the [assured] can show that they had a cargo ona vessel in respect of which bills of lading had been given as under-deck, but, notwithstanding the fact that bills of lading had been given as under-deck, they had been carried by the carrier on deck and then lost—unless they can make that out, they cannot recover on this contract. They cannot recover merely because if they had stated the true facts, they could probably have insured at the same rate as they did insure upon the statement offacts in this case. They have got to bring themselves within the terms of the contract upon which they sue, and in my judgment they have failed to do so.’ 5 EXPERIENCE OF CREW One of the defences'* pleaded by the insurers in Russell v Provincial Insurance Co Ltd'* to a claim in respect of the total loss of amotor boat after bumping on a sandbank, whilst on a voyage from Burnham-on-Crouch to Southend, was that the loss was excluded by a condition of the policy'® which stated: ‘No claim shall attach to this policy for any ... loss . . caused by the inexperience of the person in control.’ McNairJ, rejected this defence, and held*’ that the claim succeeded, for, on the evidence, the persons in control of her were men of first rate and long experience. They were of good standing in their particular line and perfectly capable and experienced in handling craft like the insured vessel. 13 Ibid, at 40. 14 Other defences were that the vessel was unseaworthy, and that she was not covered by the policy at the time of the loss because she was ‘being towed’. As to these aspects of the case, see 15 16 pp 300-301, post, and pp 270-271, ante, respectively. [1959] 2 Lloyd’s Rep 275, QBD (Com Ct). The policy was not in common marine form, but was in the company’s own form. See ibid, at 277. Ibid, at 281. CHAPTER 18 Termination and cancellation of the policy A TERMINATION The parties may terminate the policy by mutual consent.’ When a broker terminates a policy, he must have clear authority for that purpose. When the seal of the insurance company is affixed to the policy, the contract is complete, the company then becoming merely the custodian ofthe policy for the assured. Where a broker, subsequent to the sealing ofthe policy without authority procured its cancellation, such termination was held to be ineffective and the assured was entitled to recover.” B CANCELLATION The mere fact that there is a good defence to an action on a policy, quite apart from fraud, eg a defence of unseaworthiness or deviation, will not entitle the court to cancel the policy. The court is not concerned with defences to an action on a contract which is, in fact, found to exist.? But where it is shown that the policy was obtained by fraud or a fraudulent misrepresentation, the court will order it to be delivered up to be cancelled.* ' See Ivamy, General Principles of Insurance Law (4th edn, 1979), pp 248-249. 2 Xenos v Wickham (1866) LR 2 HL 296. 3 Thornton v Knight (1849) 16 Sim 509; Brooking v Maudslay, Son and Field (1888) 38 ChD 636. See further, Ivamy, op cit, p 252. * Honour v Equitable Life Assurance Society of United States [1900] 1 Ch 852. See further, Ivamy, op cit, pp 252-253. 2 CHAPTER 19 Rectification of the policy The general power ofthe court to rectify mistakes in a document has often been exercised in relation to policies of marine insurance.’ The earliest reported case is Motteux v London Assurance,” where the policy was expressed to be on the ship ‘Eyles’ ‘from Fort St George in the East Indies to London’. Before the execution of the policy, a label of the agreement had been entered in the insurance company’s book, signed by the assured’s agent and by two directors on behalf of thecompany. In the book the risk was described to be ‘at and from’ Fort St George. The loss was not recoverable on the policy as it stood, but if the policy were made to agree with the entry in the book, the claim could be sustained. Lord Hardwicke LC, held that the intention of the parties was made clear by the label, and the variance in the policy, being a clerical error, ought to be rectified. The mistake must not, however, be merely that of one party to the contract, but must be a mutual, or, as it is sometimes called, a common mistake,* and the party desirous of correcting it should commence the necessary proceedings immediately the error is discovered. He must not delay the expectation of events which may make the mistake operate in his favour, since in that case he would be held to have adopted the policy as executed.* In Lowlands SS Cov North of England Protecting and Indemnity Association? a vessel was insured with a mutual insurance association against war risks. She was taken over by the Admiralty and manned by naval ratings for the purpose, as her owners believed, of proceeding to block a port in enemy occupation. This operation would have inevitably led to her destruction. Her owners thereupon informed the association of the proposed voyage, and it was agreed that the policy should be cancelled as from the date of her sailing. Two days later she was lost on a voyage under an ordinary Admiralty charter, and had not sailed on any expedition to the enemy port. Her owners maintained that they were entitled to recover for a total loss on the ground that the agreement to cancel had been entered into under a mutual mistake. The arbitrator to whom the dispute was referred found that there was no mutual mistake, and that the agreement had not been made on a condition a For the power ofthe court to rectify, see further, Ivamy, General Principles ofInsurance Law (4th edn, 1979), chapter 24. N (1739) 1 Atk 545. See further, Collett v Morrison (1851) 9 Hare 162; Henkle v Royal Exchange Assurance (1749) 1 Ves Sen 317. w Spalding v Crocker (1897) 2 Com Cas 189; Scott v Coulson [1903] 2 Ch 249; Emanuel & Cov Andrew Wer G Co (1914) 30 TLR 518. See further, Ivamy, op cit, p 257. * See Ivamy, op cit, pp 258-259. > (1921) 6 LIL Rep 230, KBD. 274 Rectification of the policy 275 which had not been fulfilled, ie the vessel’s taking part in the expedition. His decision that the owners’ claim failed was affirmed by Sankey J, who observed:® ‘[Counsel] said, with regard to the question of mutual mistake, that this being an agreement founded on mutual mistake, the agreement to cancel cannot stand. Mutual mistake was a question offact, and the arbitrator has found there was no mutual mistake, and that it was all on one side, viz a mistake by someone in the applicants’ service or firm as to the destination of the vessel. There was no mutual mistake, but that was a question offact for the arbitrator and not for me. The last point was that it was an agreement to cancel only if the vessel went on a particular voyage—that she did not go on that particular voyage, and therefore the condition on which alone the agreement to cancel was made had never been fulfilled. The arbitrator found that the vessel went on some expedition, but that there was no evidence to show what expedition. I read the arbitrator’s finding as being that the applicants had not discharged the onus of proving that the agreement to cancel was made on a condition which had not been fulfilled, and that therefore he came to the conclusion that the applicants were not entitled to recover £9,000. On the facts as they were before the arbitrator he was entitled to come conclusion he did, and there is nothing wrong in law with the award.’ to the In Gagmere G Co Ltd v Eastern Co of Warehouses Insurance and Transport of Goods with Advances Ltd’ the Court of Appeal® refused to rectify a policy relating to a number of cases of woollen goods being sent from England to Russia because the terms of the contract had not been clearly proved. Bankes LJ, observed:? ‘There is really no sufficient evidence to establish what the contract between the parties really was, and, in the absence ofclear evidence as to what the contract really was, it seems tome to be very difficult to persuade a court that the policy should be rectified.’ In Maignen & Co v National Benefit Assurance Co'° the assured had effected a policy in respect of 138 hogsheads of burgundy from Beaune to Boulogne and London. The policy contained the words: ‘Including leakage or breakage, however caused, irrespective of percentage.’ On the arrival of the goods in London, it was found that a large quantity of wine had been lost by leakage. When a claim was made under the policy, the insurers contended that the policy was not in accordance with the ‘slip’’' under which leakage was not a peril insured against, and that the policy should be rectified accordingly. GreerJ, held that the ‘slip’ did cover leakage, and that the claim succeeded. The question of rectification did not arise. He observed:'? ‘Under these circumstances, I need not give consideration to the other question that was discussed as to whether or not—assuming that upon the interpretation ofthe “‘slip” the contract was different from that ultimately entered into by means of the actual policy—the policy could be rectified to make it correct. I am inclined to think that where a closing “‘slip”’ is sent forward for the purpose of preparing a policy, it is an intimation “‘these are our terms’’, the terms which the insurer is willing to have in the final document that is to be binding between the parties; and if these are exceeded in the writing out of the contract and the document is executed and the contract signed, I am inclined to think the insurer is bound by what he has done, notwithstanding the fact that ifit had been done in time, it might have been said :““What Ibid, at 231. (1921) 8 LIL Rep 365, CA. Bankes, Warrington and Scrutton LJJ. ds orn 9 (1921) 8 LIL Rep 365 at 367. 10 (1922) 10 LIL Rep 30, KBD. 11 As to the ‘slip’, see p 67, ante. 12 (1922) 10 LIL Rep at 31. ny 276 Rectification of the policy you are representing is not in accordance with the arrangement we made when the slip was initialled; and therefore I will not sign the policy.” It is, however, unnecessary for me to decide the point here because I think the “‘slip”’ covers the insurance ofleakage, etc., during the whole of the voyage, Beaune to London, carriage upon the railway, while being handled and put on board ship, leakage on the ship and leakage on the railway subsequently.’ In Wilson, Holgate & Co Ltd v Lancashire and Cheshire Insurance Corpn Ltd ae thle insurers contended that they were entitled to repudiate liability in respect of damage to 107 out of 657 barrels of palm oil which were insured for a voyage from Singapore to Liverpool, on the ground that the goods were not properly described under the policy, for in the policy they were stated to be ‘palm oil kernels’. !* 215 Bailhache J, held that the goods had been properly described in the ‘slip’, and that the assured were entitled to rectification of the policy. He observed:'® ‘The [insurers] have raised since then two or three other defences. In the first place, they say that “the said goods which were in fact palm oil, were not properly described under the policy”. That stands in this way. The original “slip” submitted to the underwriters described these goods as palm oil, but for some reason or another, and by a mistake, the covering instructions and the policies themselves called the stuff palm kernel oil. But I must have regard to the original contract, which, as one of the underwriters said, is the real contract he made, and in the original contract the goods are described as palm oil, and I disregard the mistake made afterwards. If necessary I should rectify the policy. I should be the more ready to rectify it because it is clear that palm oil is a better subject from an underwriters’ point of view than palm kernel oil.’ In Scottish Metropolitan Assurance Co v Stewart'’ the ‘slip’ stated that a vessel was reinsured ‘from 20 September 1922 until noon on 20 February 1923’ whereas the reinsurance policy expressly included 20 September. The vessel was a total loss on 20 September. The reinsurer contended that the risk did not attach until midnight on 20 September, and denied that the policy was in operation at the time of the loss. He claimed rectification of the policy to agree with the ‘slip’. RowlattJ,held that there were no grounds for rectification, and that 20 September was included in the period of the risk. He observed:'® ‘The word ‘‘from” is not to be treated as a technical word, but it is to be construed with reference to the circumstances ofthe case and the intention of the parties to be inferred from those circumstances. This is not a case where the period of time is named and then the day from which it is to run is also named. There you have to say whether you exclude a day at the beginning or exclude a day at the end in order to get the proper length of time. Here we havea case where merely the day indicating the commencement is mentioned and a particular point of time at the other end and the length of time depends upon those facts and not upon an independent declaration of its length. ... I act upon what I think is the meaning of this language as ordinarily used, without pretending to find elaborate reasons for it. When you say from one day to another and say nothing more, you mention the days which prima facie you include—you mention days with which you are concerned. You do not mention those with which you are not concerned.’ "3 (1922) 13 LIL Rep 486, KBD. ‘* Other ‘defences’ were that the loss of the goods was due to inherent vice, and that there had been non-disclosure of a material fact, viz the existence of another policy in respect of the goods, and the condition of the goods as stated in the bill of lading. As to these defences, see pp 250-251, ante, and pp 64-65, ante, respectively. "S As to the ‘slip’, see p 67, ante. *© (1922) 13 LIL Rep at 487. '” (1923) 15 LIL Rep 55, KBD. "8 Tbid, at 58. Rectification of the policy 277 In Eagle Star and British Dominions Insurance Co Ltd v A V Reiner’? a reinsurer was held to be entitled to rectification of a reinsurance policy so that it correctly set out the terms of the ‘slip’. Salter J, said*° that the policy was not in accordance with the contract which the parties made, and that there was a mistake’ common to them both. The contract, which they had made in fact, appeared on the ‘slip’ and was one under which the risk attached, and was meant by both of them to attach ‘at and from and off’ Gibraltar, and not from Spain as stated in the reinsurance policy. In American Employers Insurance Co v St Paul Fire and Marine Insurance Co Ltd? some barges were insured under a policy giving coverage on a ‘per vessel’ basis. The barges were destroyed in an accident whilst being towed. When the assured claimed under the policy, the insurers denied liability on the ground that the parties intended coverage to be on a ‘per occurrence’ basis, and claimed rectification of the policy. Maxwell DJ, giving judgment in the District Court for the Northern District of West Virginia, refused to grant the application because the insurers had not shown that there had been a mutual mistake.* In Pindos Shipping Corpn v Raven, The Mata Hari* a policy in respect of a yacht contained a warranty” which stated ‘warranted class maintained’. She became a constructive total loss after sinking in a storm. At the time of the loss she was not in class. When a claim was made on the policy, the insurers repudiated liability on the ground that the warranty had been broken. The assured applied for rectification of the policy on the ground that at the time ofthe initialling of the ‘slip’® they and the insurers intended that there should be no such warranty in the policy. BinghamJ, refused to rectify the policy for even if the assured had intended that there should be no such warranty, it was not an intention common to both parties and that was fatal to the assured’s claim.’ "9 (1927) 27 LIL Rep 173, KBD. N Ce ibid eat 7: 1 As to the evidence of a mistake having been made, see ibid, at 175. ? [1978] 1 Lloyd’s Rep 417. 3 See the judgment ibid, at 422. * [1983] 2 Lloyd’s Rep 449, QBD (Com Ct). 5 As to warranties, see chapter 21, post. © As to the ‘slip’, see p 67, ante. 7 See the judgment at [1983] 2 Lloyd’s Rep at 453. CHAPTER 20 Alteration of the policy Policies may be altered with the consent of those concerned.’ Alterations are usually made by endorsement on the policy, signed or initialled by the parties. Only those who consent to the alteration will be bound by it, and if the policy is varied in any material respect by the assured alone, it becomes void. But such a result can only arise when the alteration is material.’ Therefore, in Sanderson v Symonds,* where the policy allowed the ship ‘to sell, barter, and exchange goods at any ofthe ports to which under the terms of the policy she might proceed during her stay’, and the assured inserted the words ‘and trade’ after the words ‘her stay’, the court held that the alteration was not material. Accordingly, the insurer was liable although he had not signed the alteration. But alterations in the nature of the voyage, by changing the port of destination, the route, or the day of sailing, have been held to be material alterations by which the policy was avoided, except in regard to those insurers who had signed or initialled the alterations.* In Norwich Union Fire Insurance Co v Colonial Mutual Fire Insurance Co Ltd? a vessel was insured for £15,000 by her owners under a policy issued by the plaintiffs. The policy stated that her hull and machinery were valued at £313,050. The plaintiffs reinsured £2,500 of their risk with the defendants. The reinsurance policy stated: ‘The said ship and goods and merchandise . . . are and shall be valued at £2,500 on hull and machinery, etc, valued at £313,050. . . . Being against the risks of total and/or constructive and/or arranged total loss of steamer only. . . . Subject to the same clauses and conditions as the original policy ... and to pay as may be paid thereon.’ During the currency ofthe original policy the plaintiffs and the owners ofthe vessel agreed to an alteration as to the terms concerning the hull and machinery, and the original policy was altered to read: “Agree to reduce policies on hull and machinery valued at £313,050. To pay only £225,000 in event of total loss, constructive total loss and return premium JMS re 10 per cent gross on The defendants did not assent, and were not aware of the alteration in the original policy. Shortly afterwards the vessel sank and became a total loss. The owners claimed from the plaintiffs the original value ofthe vessel, viz £313,050, " See further, Ivamy, General Principles of Insurance Law (4th edn, 1979), p 254. ? See further, Ivamy, op cit, p 255. > (1819) 1 Brod& Bing 426. See further, Sanderson v McCullom (1819) 4 Moore CP 5. * Langhorn v Cologan (1812) 4 Taunt 330; Campbell v Christie (1817) 2 Stark 64; Fairlie v Christie (1817) 7 Taunt 416. ° (1922) 12 LIL Rep 94, 215, KBD. 278 Alteration of the policy 279 but ultimately compromised for £225,000. The plaintiffs paid them £12,200, which was their proportion of the compromised value. The defendants paid to the plaintiffs £2,036 8s 4d, which was the compromised proportion of the £2,500 which was the sum insured under the reinsurance policy. The plaintiffs, however, claimed the balance of the £2,500. McCardieJ, held that the action failed because the alteration was a material one, and had been made without the assent or knowledge of the defendants, who were accordingly discharged from further liability under it. He observed :° ‘The parties first embodied their new bargain in a “‘slip” and then endorsed the effect of the “slip” on the reinsurance policy. If this was not a variation, and a variation moreover of a material character, I know not what a material variation can be. The original rights and obligation under the head policy were altered in substantial fashion. Premiums were varied and returned and the amount payable on total loss, constructive total loss, and/or arranged total loss was deliberately altered to a striking extent, viz from £313,050 to £225,000. It cannot, I think, possibly be said that the policy as altered was the same as the original policy. The very object ofthe parties was to effect a serious alteration. It is true that the “‘thing”’, ie the physical subject-matter of the reinsurance policy remained the same, but the foundation ofthe reinsurance policy, to wit, the head policy, was changed in substantial manner. In other words, the original foundation ofthe reinsurance policy had, in my view, ceased to exist. The original policy had, in substance, become a fresh policy with different terms. The alteration had been effected without the assent or even the knowledge of the defendants. The only sound rule seems to be thatthe head policy cannot be altered save with the consent of the reinsurer. It is not without interest to refer to a branch of the law, which although different in some ways, yet presents many features in common with insurance. I refer to suretyship. It is well settled that ifa creditor, without the consent ofthe surety, varies the terms of his bargain with the debtor, the surety is prima facie discharged.’ © Tbid, at 218. CHAPTER 21 Warranties Warranties are often included in policies. These are undertakings by the assured, and are ofa promissory nature. There are two types of warranty: (i) an express warranty; and (ii) an implied warranty. If there has been a breach of warranty, the insurer is entitled to avoid liability on the policy as from the time when the breach takes place. There are various excuses available to the assured who is guilty of abreach of warranty. In certain circumstances the insurer will be held to have waived the breach of warranty. A NATURE OF WARRANTIES Section 33(1) of the Marine Insurance Act 1906 states: ‘A warranty . . . means a promissory warranty, that is to say, a warranty by which the assured undertakes that some particular thing shall or shall not be done, or that some condition shall be fulfilled, or whereby he affirms or negatives the existence of a particular state of facts.’ A warranty must be exactly complied with, for s 33(3) of the Marine Insurance Act 1906 states: ‘A warranty, as above defined, is a condition which must be exactly complied with, whether it be material to the risk or not.’ Thus, in Bond v Nutt,’ where a ship was warranted ‘to have sailed on or before 1 August’, Lord Mansfield said :? ‘Had she or had she not sailed on or before that day? No matter what cause prevented her, if the fact is that she had not sailed, though she stayed behind for the best reasons, the policy was void.’* In this connection a warranty differs from a representation, for s 20(4) of the Marine Insurance Act 1906 provides that: ‘A representation as to a matter offact is true, ifit be substantially correct, that is to say, ifthe difference between what is represented and what is actually correct would not be considered material by a prudent insurer.’ Again, a representation is not embodied in the policy, for it is ‘made by the assured or his agent to the insurer during the negotiations for the contract’.* On the other hand, 8 35(2) states: * (1777) 2 Cowp 601. See further, Hore v Whitmore (1778) 2 Cowp 784; Earle v Harris (1780) 1 Doug KB 357; Sanderson v Busher (1814) 4 Camp 54n. 2 (1777) 2 Cowp at 606. 3 The word ‘void’ means, of course, ‘voidable’. * Marine Insurance Act 1906, s 20(1). ; 280 Nature of warranties 281 ‘An express warranty must be included in, or written upon, the policy, or must be contained in some document incorporated by reference into the policy.’ In order to ensure the exact compliance with any representation made by the assured, the insurer should take care that the representation is inserted in the policy, and thus be converted into a warranty. It has been held that a representation does not become a warranty by folding the paper containing it inside the policy.° It was formerly said that if the representation was only wafered to the policy, it was not a warranty.° If, however, it is, in fact, a written term of the contract, the mode of attachment will not now constitute an objection to its status as a 2 warranty.’ While exact compliance is required, it is all that is required, and the obligation of the assured is limited to such compliance and extends to nothing else. B THE TYPES OF WARRANTY Section 33(2) of the Marine Insurance Act 1906 states: ‘A warranty may be express or implied.’ Section 35(3) states: ‘An express therewith.’ warranty does not exclude an implied C EXPRESS WARRANTIES A Construction of an express warranty warranty, unless it be inconsistent The word ‘warranted’ is not essential to constitute a warranty. Thus, s 35(1) of the Marine Insurance Act 1906 states: ‘An express warranty may be in any form ofwords from which the intention to warrant is to be inferred.’ The words will be interpreted in a business sense. Thus, in Hart v Standard Marine Insurance Co Ltd,? where there was a warranty stating ‘Warranted no iron or ore exceeding the net registered tonnage’, it was said that an ordinary businessman would consider that steel was comprised in the common meaning of the word ‘iron’. But in the absence of some necessity for a special construction, the warranty will only mean what it says, and it will not be extended to put a further liability or disability on the assured in relation to the contract. Consequently, in Hide v Bruce’® a warranty that a ship ‘will carry 20 guns’ Pawson v Watson (1778) 1 Doug KB 12n. Ibid. Bensaude v Thames and Mersey Marine Insurance Co [1897] AC 609 at 612 (per Lord Halsbury LC). o2rAQXA DW Hide v Bruce (1783) 3 Doug KB 213. ° (1889) 22 QBD 499, CA. 10 (1783) 3 Doug KB 213. 282 Warranties was held not to mean that she would have the necessary men to work them. Similarly, in Laing v Glover,'' where a vessel was warranted ‘to sail with convoy’, and sailed with the convoy, but was driven back by bad weather, and the convoy went on without her, it was held that the warranty did not mean that she was bound to wait for a fresh convoy. Again, in Muller v Thompson'* an insurance ‘on cargo being 1,031 hogsheads of wine’ did not involve a warranty that no other cargo would be shipped. The court will not allow a warranty to be constituted by putting a strained construction on the words used, but will interpret them by the same rules of construction applied to the interpretation of all commercial documents in order to determine the real intention of the parties, and to see whether they intended the words to constitute a warranty.’ ? Where the words are plain and bear an unmistakable meaning, no evidence will be admitted for the purpose ofputting a different construction on them. '* B Necessity for inclusion in policy As has been stated above, a warranty must be included incorporated into it by reference, for s 35(2) provides: in the policy or “An express warranty must be included in, » or OF written pon, upon, the the policy policy, or must be contained in ae P some document incorporated by reference into the policy.’ C Examples of express warranties A large number of instances of express warranties are to be found in the reported cases. These may be classified under the following heads: Sailing warranties. Warranty as to position of ship. Warranty as to number of crew. Convoy warranties. Warranty as to nationality. Warranty as to neutrality. Warranty as to part uninsured. Other instances. CONDO PWN 1 Sailing warranties Sometimes there is included in the policy a sailing warranty, eg ‘warranted to sail on or before 10 May 1985’. In this kind of warranty the important question to be decided is whether the ship has ‘sailed’ within the meaning of the warranty. Parke B, in Roelandts v Harrison’ defined a ‘sailing’ in the following words: “That period of time when the vessel breaks ground, being at that time fully fit for sea, having the cargo on board which he intends to carry, with a constant crew, and having permission to leave by having the Custom House clearances on board.’ 1) (1813) 5 Taunt 49. ‘2 (1811) 2 Camp 610. "> Baring v Clagett (1802) 3 Bos& P201; Small v Gibson (1849) 16 QB 141; Colledge v Harty (1851) 6 Exch 205; Union Insurance Society ofCanton Ltd v George Wills & Co [1916] AC 281. '* Provincial Insurance Co ofCanada v Leduc (1874) LR 6 PC 244. 1S (1854) 9 Exch 444 at 456. Express warranties 283 Thus, to constitute a sailing, three conditions must be complied with: 1 The ship must be ready and equipped for the first stage of her voyage if the voyage is necessarily divisible into stages, or for the whole of the voyage if it is not divisible. NO OO a She must unmoor and proceed on her course. When she leaves her moorings, the master must have the intention of then actually proceeding on the voyage. Readiness of vessel The ship must be ready and equipped with her crew, papers, and all requisites. In Ridsdale v Newnham'® a vessel was insured ‘at and from Portneuf to London’. The policy contained a warranty ‘to sail on or before 28 October’ The vessel sailed from Portneuf on 26 October with a crew sufficient to take her to Quebec, where she got her clearances, and took on board the rest of her crew. She left Quebec on 30 October. Lord Ellenborough CJ, said:'’ ‘The warranty could only be satisfied by a commencement of the voyage with a crew competent to carry the ship to her port of destination. When the ship was lying at Quebec obtaining her clearances and taking in her crew, how can she be considered as having sailed on her voyage?’ On the other hand, in Bouzllon v Lupton'® a vessel was insured ‘from Lyons to Galatz, ship warranted to have sailed before 15 August’. She left Lyons for the voyage down the river Rhone before the day named in the warranty, but with only her river crew and without her full tackle for the sea voyage. She could not have made her river voyage rigged for sea, and it was usual to take her masts and heavy tackle on board at Marseilles. She took them on board at Marseilles without delay, and sailed from there on 23 August. It was held that the warranty had been complied with. b Unmooring and proceeding on the voyage The vessel must unmoor and proceed on her voyage. In Nelson v Salvador’? a vessel was warranted ‘to sail on or before 10 August’. She cleared outwards on 9 August, her passengers and cargo being on board. On the morning of 10 August one of the two anchors was weighed, some sails were set, and she was moved about 30 fathoms by hauling on the cable of the remaining anchor. Before she heaved anchor, a heavy swell was observed setting into the bay, and the ship remained as she was until the morning of | 1 August, when she actually left the port. It was held that the warranty had not been complied with. But in Wood v Smith, The City ofCambridge?® a vessel left dock with a pilot on |eset 1© (1815) 3 M&S 456. See also Graham v Barras (1834) 5 B& Ad 1011, where the crew was not shipped in time; Pittegrew v Pringle (1832) 3 B&Ad 514, where the ballast was not shipped; Hudson v Bilton (1856) 2 Jur NS 784; Price v Livingstone (1882) 9 QBD 679; Thompson v Gillespy (1855) 5 E&B 209. 7 (1814) 4 Camp 111. The Court of King’s Bench later refused to grant a new trial: (1815) 3 M&S 456. 18 (1863) 15 CBNS 113. (1829) Mood & M 309. 20 (1874) LR 5 PC 451. 284 Warranties board, and anchored some distance down the river with the object of crossing the bar earlier next day than she could have done if she remained in dock until the next morning. It was held that this operation was a ‘proceeding to sea’ within the meaning of a local Harbour Act. On the other hand, in The Cachapool,' where a vessel in leaving dock on her voyage sustained damage and anchored in the river for repairs, it was held that when so anchored, she was not ‘proceeding to sea’. . c Intention to proceed to sea The third element ofa ‘sailing’ is the intention of the master to proceed on his voyage in the usual and customary way. The question therefore is ‘What was the object and intention of the master when he weighed anchor?’ The element of a ‘sailing’ was put in the form ofthe following proposition by Counsel for the insurer in Thellusson v Staples: ‘To constitute a “‘sailing”’ within the meaning of the warranty the vessel, at the time of her sailing from the port of loading, must be in the contemplation ofthe captain at absolute and entire liberty to proceed to her port of delivery in a mathematical line if it were possible.’ Thus, in Sea Insurance Co v Blogg® in a reinsurance policy on goods ‘per steamers as attached sailing on or after 1 March 1896’, the assured declared on the ‘Massacoit’. The vessel completed her loading about 10pm on 29 February, and, having cleared the Custom House, was ready for sea. The master moved her from the wharf about 500 yards into the stream and there anchored until the morning, his object being to prevent the crew going ashore and getting drunk. On the following morning, | March, at about 8 am the ship weighed anchor and proceeded to sea. It was held that the warranty had been complied with, and that the movement of the vessel on 29 February was not a ‘sailing’ because there was no intention on the part of the master of then proceeding to sea. Further, in Wright v Shiffner,* sailing from the port of departure to a place of rendezvous outside the direct and usual course of the voyage to await a convoy, was held to be a compliance with the warranty if the intention of the master was to sail with the convoy in the usual way. WARRANTY ‘TO DEPART’ The warranty ‘to depart’ from a port means to leave the port, not merely to sail towards the mouth or entrance of the port. In Moir v Royal Exchange Assurance Co° a vessel was insured ‘at and from Memel’. She was warranted ‘to depart on or before 15 September’. She cleared on 9 September and sailed on her voyage, but before she got out of the harbour, the wind changed and she came to anchor within the harbour’s mouth, and was detained until after 15 September. Lord Ellenborough CJ, said:° (1881) 7 PD 217. Cited in 1 Doug 366n. [1898] 2 QB 398. See also Fisher v Cochran (1835) 5 Tyr 496; Lang v Anderdon (1824) 3 B&C 495. (1809) 2 Camp 247. (1815) 3 M&S 461. Ibid, at 462. Dunr WN Express warranties 285 ‘If this had been a warranty “‘to sail”’, there was a sailing abundantly proved. But ‘“‘to depart” raises a question of grammatical construction. A warranty to depart on a particular day is, I think, a warranty to be out of port on or before that day.’ WARRANTY ‘TO SAIL FROM’ The words ‘to sail from’ have received the same judicial interpretation as the words ‘to depart’.’ WARRANTY ‘TO SAIL TO’ The warranty ‘to sail to’ means ‘to sail towards’, and does not mean ‘to arrive ate 8 2 Warranty as to position of ship Warranties are sometimes inserted declaring the whereabouts or condition of the vessel on a date named, the object being to give the insurer a better idea of the risk. Section 38 of the Marine Insurance Act 1906 states: “Where the subject-matter insured is warranted ‘‘well’’ or “‘in good safety” on a particular day, it is sufficient if it be safe at any time during that day.’ In Blackhurst v Cockell? a policy on a ship contained a warranty stating ‘Lost or not lost. Warranted well on 9 December’. The policy was subscribed between 1 pm and 3 pm on 9 December. The vessel was, in fact, lost at about 8 am on that day. It was held that the warranty was complied with by the fact that the vessel was safe at some time on the day when the underwriters subscribed the policy, although she was not safe at the particular hour when they subscribed it. The warranty protected them against all losses before that day, but not against losses on that day. A warranty that a ship was in port on a day named is not equivalent to a warranty that the ship was ‘safe’ on the day named. The vessel must be in the named port, and not elsewhere. Thus, in Colby v Hunter'® a policy on a ship stated ‘at and from Hamburg to Vigo. Warranted in port on 19 October’. On that date the ship was in the port of Cuxhaven, which was 90 miles outside the limits of the port of Hamburg. It was held that the warranty had not been complied with. 3 Warranty as to number of crew Sometimes the policy contains a warranty as to the number of crew to be carried. Thus, in De Hahn v Hartley'' a policy on a ship contained a warranty stating that she was ‘to sail from Liverpool with 50 hands or upwards’. She left Liverpool with only 46 hands, but at Beaumaris took six more hands on board. 7 Moir v Royal Exchange Assurance (1815) 3 M&S 461; Lang v Anderdon (1824) 3 B&C 495; Baines v Holland (1855) 10 Exch 802. 8 Colledge v Harty (1851) 6 Exch 205; Provincial Insurance Co of Canada v Leduc (1874) LR 6 PC 244. ° (1789) 3 Term Rep 360. 10 (1827) Mood & M 81. 11 (1786) 1 Term Rep 343. ¥ 286 Warranties It was held that the warranty had not been complied with, even though the full number had been made up at Beaumaris. 4 Convoy warranties In time of war, policies have often contained warranties that vessels shall sail under the protection of an armed convoy. In warranties of this class the rule requiring an exact compliance with the warranty has always been regarded as one of special importance, and the excuse that a ship was prevented by stress of weather from sailing with the convoy would not avail the assured.'? A warranty ‘to sail with convoy for the voyage, with leave to go to the place of rendezvous and join the convoy’ means that a ship must receive her sailing instructions at the place of rendezvous, or the warranty will not be complied with. Thus, in Anderson v Pitcher’? a vessel received her sailing instructions after the convoy had been under way for 2 days. It was held that at the time ofsailing she was not part ofthe convoyed fleet, since she had no sailing instructions at the place of rendezvous. But where the warranty is that the ship shall sail with convoy, she may sail without convoy from the port of loading to the place of rendezvous, there to join her convoy for the voyage even though there may be a convoy for ships bound for other destinations between the loading port and the place of rendezvous. '* 5 Warranty as to nationality Section 37 of the Marine Insurance Act 1906 states: “There is no implied warranty as to the nationality ofa ship, or that her nationality shall not be changed during the risk.’ The mere possession of a characteristic national name is not a warranty that the ship is of any particular nationality. Still less is it a warranty that the nationality of the ship shall remain unchanged either during the continuance of the voyage or during the currency ofthe policy. Ifa ship is warranted to be ofa certain nationality, the warranty is complied with if she is of the specified nationality at the time when the warranty attaches, and if the insurer requires the nationality of the ship to remain unchanged during the risk, he must expressly state that in the policy.'* As to what establishes nationality, Lord Kenyon LCJ, held in Tabbs v Benedelack'® that persons residing in a country carrying on a trade, by which both they and the country were benefited, were to be considered as the subjects of that country, and were so considered by the law of nations, at least, so far as to subject their property to capture by a country at war with the country in which they lived. ‘2 Sanderson v Busher (1814) 4 Camp 54n. "3 (1800) 2 Bos&P 164. * Warwick v Scott (1814) 4 Camp 62, NP. *S Eden v Parkison (1781) 2 Doug KB 732; Tyson v Gurney (1789) 3 Term Rep 477; Dent v Smith (1869) LR 4 QB 414. 16 (1802) 4 Esp 108. See also M’Connell v Hector (1802) 3 Bos&P 113; Baring v Clagett (1802) 3 Bos&P 201; Lothian v Henderson (1803) 3 Bos& P 499; Baring v Christie (1804) 5 East 398. Express warranties 287 In that case a ship ‘warranted to be American property’ was captured by the French, and on a claim being made by the assured the insurer alleged a breach of the warranty. The assured was an American living in England married to an English woman. The vessel had been built in America, bought in America from an American, brought to England, and properly documented as an English ship, but the assured was not domiciled in England. The insurer, however, succeeded in establishing the breach of warranty on the ground stated by the Lord Chief Justice. To comply with a warranty of nationality, a ship must not only be of the nationality specified, but she must carry the usual documents and other things which are necessary to prove it. These are the flag, the certificate of registry, log-book, bill of health, invoices, bills of lading, certificates of origin etc.'’ She is, however, only bound to carry those documents which are pres¢ribed either by international usage or by treaty. By the Merchant Shipping Act 1894, s 68, the national character ofa ship has to be declared before she clears, and the customs officer inscribes that name on the clearance; and, moreover, the ship may be detained until such declaration is made.'§ The flag which the ship flies when there is no danger, and the nationality of the consul on whom the master calls when he is in port, are two elements which will form strong evidence of the national character of the ship.'° 6 Warranty as to neutrality Section 36(1) of the Marine Insurance Act 1906 states: ‘Where insurable property, whether ship or goods, is expressly warranted neutral, there is an implied condition that the property shall have a neutral character at the commencement of the risk, and that so far as the assured can control the matter, its neutral character shall be preserved during the risk.’ Section 36(2) goes on to state: “Where a ship is expressly warranted “‘neutral”’ there is also an implied condition that, so far as the assured can control the matter, she shall be properly documented, that is to say, that she shall carry the necessary papers to establish her neutrality, and that she shall not falsify or suppress her papers, or use simulated papers. If any loss occurs through breach of this condition the insurer may avoid the contract.’ The employment of simulated papers is a breach of the warranty, for it renders the ship liable to capture and condemnation. The fact that the ship cannot trade without them makes no difference,”° although it is open to the insurer to agree to the use of such papers.’ Moreover, the destruction of the ship’s papers may be a breach of the warranty, for, like mutilation, erasure, or alteration of documents, it is a circumstance ofgreat suspicion, which will always justify arrest, and may lead to condemnation.’ '7 Geyer v Aguilar (1798) 7 Term Rep 681. See also Kindersley v Chase (1801) 2 Park’s Marine Insce 8th Edn 743; Rech v Parker (1798) 2 Esp 615; Baring v Clagett (1802) 3 Bos& P 201. "8 See The Princess Charlotte (1863) Brown & Lush 75. ‘9 Arcangelo v Thompson (1811) 2 Camp 620, NP. 20 Horneyer v Lushington (1812) 15 East 46; Oswell v Vigne (1812) 15 East 70; Fomin v Oswell (1813) 3 Camp 357. 1 Bell v Bromfield (1812) 15 East 364. 2 The Hunter (1815) 1 Dods 480; Bernardi v Motteux (1781) 2 Doug KB 575. ¥ ; Warranties 288 Where the ship is condemned by a foreign court for a breach of neutrality, the sentence of the court is admissible in evidence to show the grounds upon which it proceeded. ? So also is the sentence ofa British Vice-Admiralty Court.* But if it should appear that the condemnation proceeded on the basis of a breach ofa local or domestic law, as distinguished from international law or the obligations of a treaty between the country of the ship and that of the court passing sentence, the warranty will not have been broken, eg where condemnation proceeds on the basisof a violation of certain laws relating to navigation.° It has been said that the warranty is broken if the forfeiture of the protection which neutrality affords is brought about by the wilful act of the master,° but the effect of such conduct will depend on the circumstances of each particular case, as it may amount to barratry.’ Effect of breach of warranty of neutrality The effect ofa breach of warranty of neutrality is ordinarily to render the policy voidable at the instance ofthe insurer, even although the breach may have had no connection with any loss that may have occurred. Hence, where the assured is responsible for a breach of neutrality in relation to a policy on goods, the insurer may avoid liability as from the date of the breach. This is, however, not the case where a ship warranted neutral is nevertheless not properly documented, since in that event s 36(2) of the Marine Insurance Act 1906 expressly provides that the insurer can avoid liability only where this is the cause of the loss. 7 Warranty as to part uninsured Sometimes the policy contains a warranty stating that the assured is to keep a certain part of the value of the subject-matter uninsured. Clauses of this kind had their origin in the old custom of requiring the assured to be his own insurer for a part of the value. The Ordinance of Louis XIV of 1681 required the assured to run the risk of one-tenth, unless the policy specially provided that the whole was to be insured. The intention was doubtless to ensure greater care on the part of the assured, and probably it had some practical value when the connection of the assured with the ship was closer than it is in modern times. In Muirhead v Forth and North Sea Mutual Insurance Association® a warranty that ‘the assured shall keep one-fifth uninsured’ was held to mean that the assured should be his own insurer for one-fifth, and that if he effected an insurance or insurances for more than four-fifths, the underwriters on the policy containing the warranty were not liable. In Roddick v Indemnity Mutual Marine Insurance Co? it was held that the Lothian v Henderson (1803) 3 Bos&P 499. Gibson v Mair (1813) 1 Marsh 39. Pollard v Bell (1800) 8 Term Rep 434; Bird v Appleton (1800) 8 Term Rep 562. Garrels v Kensington (1799) 8 Term Rep 230. As to barratry, see pp 161-169, ante. [1894] AC 72. [1895] 2 QB 380 F&F KDN MAI 0w Express warranties 289 warranty was broken if part of the amount warranted uninsured had been insured under a p pi policy, even though such a policy would be unenforceable at law. But if an insurer stops payment, and the assured in good faith insures again for the estimated deficiency, the mere existence of a policy of such doubtful value is not a breach ofwarranty, for there can be no breach ofwarranty unless the insurance alleged to constitute a breach of the warranty is effective and really available to the assured. Thus, in General Insurance Co of Trieste v Cory'® a policy relating to a vessel valued at £12,000 contained a warranty stating ‘warranted £2,400 uninsured’. Of the remaining £9,600, £5,000 was insured with a syndicate, who stopped payment and advised their assured to effect new insurances. Thereupon, the assured, estimating that £2,000 out of the £5,000 was still effective, procured a fresh policy elsewhere for £3,000, and consequently held policies for £12,600. It was held that, in the circumstances, there was no breach of warranty. The warranty sometimes takes the form of a stipulation that the subjectmatter of the insurance shall not be insured for more than a named sum. Thus, in Lishman v Northern Marine Insurance Co'’ a warranty of this kind stipulated that the hull should not be insured for more than £2,700 after 20 March. A further insurance for £500, which would expire on 20 March, but would be renewed unless the assured gave notice not to renew, was not discontinued by express notice. The vessel was lost on 16 March, and the loss was known on the next day. It was held that the warranty was complied with, for the loss of the vessel before 20 March relieved the assured from the obligation of giving express notice of non-renewal, there being no vessel in existence to form the subject-matter of a renewed insurance. In General Shipping and Forwarding Co v British General Insurance Co Ltd’? a vessel was insured under a time policy containing the Institute Time Clauses (Hulls) warranty, which stated: ‘Warranted that, except as hereinafter mentioned, the amount insured for account ofassured ...0n premiums, freight, hire, profit, disbursements, commissions, or other interests, policy proof of interest or full interest admitted, or on excess or increased value of hull or machinery, however described, shall not exceed 15 per cent of the value of the hull and machinery as stated herein, but this warranty shall not restrict the assured’s right to cover: PREMIUMS: Any amount not in excess of actual premiums on all interests of whatsoever nature insured including estimated premium on any Club Insu

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